Snap Shares Fell below IPO Price: What’s Next?
Snap shares fall below IPO price
Snap (SNAP), Snapchat’s parent company, has had a rough time at the exchanges lately. On Monday, July 10, 2017, SNAP stock closed at $16.99, which was below the IPO (initial public offering) of $17. Analysts expect Snapchat’s user growth to slow down in 2Q17. The app seems to be losing popularity as its download rates have been declining.
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Snap revenues fell in 1Q17
As the graph above shows, the company’s revenues fell QoQ (quarter-over-quarter) in fiscal 1Q17, which ended in April, for the first time in several quarters. Investors will keep their eyes peeled for 2Q17 earnings in August, which could make a big impact on Snap stock.
Snapchat’s parent was valued at more than $20.0 billion during its IPO, making it the biggest US-listed IPO since Alibaba (BABA) in 2014. However, investors who bought Snap shares at the time of the IPO are now in the negative. Snap shares have fallen 17.9% over the last three months.
This is not the end for Snap
However, it’s not rare for share prices to fall after an IPO. When Facebook (FB) debuted back in 2012, its shares fell below the IPO price on the second day. Now, the stock is currently trading at more than four times its IPO level.
It hasn’t been a good year for IPOs in 2017. More than 33.0% of IPOs launched in 2017 were trading below their IPO levels as of July 7, 2017, according to Dealogic. Blue Apron Holdings (APRN), the meal kit delivery company, has also been trading below its IPO price of $10 per share. On Monday, its stock closed at $8.10, which represents a 19.0% fall from its IPO price.
Snapchat still has only a fraction of users compared to Facebook. It has 255.0 million monthly users compared to Facebook’s 2.0 billion.