Why Snap Stock Has Hit Its Record Low
Snap stock fell after being rejected from the S&P 500 index
Snap (SNAP) stock fell another 4.0% on Tuesday, August 1, 2017. But that’s not only because of the lockup expiration that allows for insider trading. Insiders and employees owned close to 400.0 million shares before the expiration.
Snap shares have faced relentless downward pressure since going public on March 2, 2017. And there’s more bad news for the company. It was announced that its stock will not be part of the popular S&P 500 Index (SPY) (IVV). That’s because the index doesn’t include stock of companies with multiple share classes.
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Why Snap stock has fallen since the IPO
This news doesn’t bode well for Snap. Investors more often than not invest in index ETFs rather than individual stocks as was the case a few decades ago.
Snap had an opening IPO (initial public offering) price of $17 per share and saw its stock soar initially to more than $27 per share, as the graph above shows. However, Snap shares have fallen more than 50.0% since then. One of the big setbacks for the company came when Facebook’s (FB) Instagram copied Snapchat’s Stories segment.
Snap reported poor fiscal 1Q17 numbers, which caused its stock to fall further in May 2017. Its earnings next week could be the next trigger for the beleaguered company. Total monthly active users will be an important number in next week’s results.