Economy

Snap falls below its IPO price for the first time

Snap falls below its IPO price for the first time”

Snap closed down 1.1% at $16.99 on Monday, below its March 1 IPO price of $17-a sign that the parent of disappearing-message app Snapchat is losing popularity among investors as a hot new tech stock. In that same span, Facebook has gained 12% and Twitter is up 14%.

"The pace of growth in monetization may not be as fast as we originally modeled", Mark May, an analyst at Citigroup Inc., said in a note downgrading the stock last month.

The stock has fallen more than 30% so far this year, as concerns about Snap's future growth, profitability and rivalry with Facebook Inc.'s (FB) Instagram have given Wall Street a lot to worry about in recent months.

This is significant because it means that overall, public investors have lost money on the company since its March IPO. But many on Wall Street have been critical of Snap's high valuation and slowing user growth, and the company has warned it may never become profitable.

Snap executives and company insiders won't be able to sell their shares until their 150-day lockup period expires on July 30.

That, according to DiClemente, may only push the stock lower.

Snap debuted at $17 and first began trading at $24.

Snap's low on Monday was 42.4 percent below the record high of $29.44 reached in its second day of trading. That bodes well for Snap, as advertising is the company's main revenue source. The positive performance was said to ignite interest from other private companies in holding their own public offerings, after many months of IPO drought.

The enthusiasm didn't last. While the first six months of the year saw a jump in US tech IPOs from 2016, there is more concern looming over Snap's listing than its peers.

Snap shares have been bumping around their IPO price ever since closing at that level on June 15.



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