Snapchat, everyone’s favorite video-centric social app, took a giant leap earlier this year and went public. The service’s parent company, Snap Inc., launched a stock ($SNAP) at the low price of $17. This let them raise over $3 billion in the process and turn the company’s founders instant billionaires. Snap’s initial public offering was heavily scrutinized not just because of the service’s popularity, but because of the scarcity of tech stocks launching with a multi-billion-dollar valuation.
Since $SNAP launched in March, the stock hasn’t performed in the way many expected. Where as many high profile tech stocks debut with sizable gains and stellar results (Facebook, to name one), Snap Inc.’s stock didn’t do anything special. As of July 10th, the company’s stock is even lower than when it first launched, meaning original investors actually lost money on their big bet.
How did the biggest IPO of the year become just another poorly performing stock? More importantly, why are so many investors sour on Snap?
Snap’s stock is down by 30% since its launch day in March.
$SNAP launched at the price of $17 on March 2nd, only to end the day at $24.48 per share. As of this writing, $SNAP is worth $16.99. This is 1 cent less than the launch price, and a 30.4% decrease from the $24.48 pricing. Not only did original investors lose one center per share, but all gains they made with the stock were erased. This is not good for a stock that’s not even six months old.
Investors are leaving Snap’s stock because of speculation.
$SNAP has been on the decline for a while now, but today marked a sizable loss for the company. This is because investors are worried that shareholding employees and original investors will soon sell off their shares of Snap Inc. These “insider” shareholders were prevented from selling their stock until later this month. Since Snap’s stock hasn’t done so hot, regular investors believe insiders might sell their shares to get whatever money they can out of the stock. This, of course, would drive stock prices down even further.
Should you invest in $SNAP?
If you think this is the best $SNAP will ever do on the market, you obviously wouldn’t want to buy their stock. If insiders do, in fact, sell their shares, it would show their lack of faith in the company/stock. This could possibly signify the beginning of the end of Snapchat.
If you think $SNAP will recover, then buying shares at $16.99 or lower could make sense. Since shares re at a new low, you would essentially get them for a discount if they go back up again. You can’t predict the future, so you won’t know which scenario is most likely to occur. Yet if Snapchat and its stock sees some surge in popularity, you could end up making some sweet gains.