Morning Report: Snap is in the middle of racking up another day of stiff share price declines. What’s going on?
Shares of Snap, the parent company of the popular Snapchat social app, are off 4.47 percent today, easing 84 cents per share to $17.97.
That price is notable. Snap sold shares in its IPO at $17 per share, putting the hot consumer technology uncomfortably close to its debut value.
The company’s multi-billion dollar IPO was initially followed by a strong run in its value. Snap, as we have reported ad nauseum, opened at $24 per share, and traded as high as $29.44 before slipping.
We don’t need to relitigate the company’s earnings report. Instead, observe the following chart, tracking Snap’s share price including the result of earning’s correction:
As you can see, starting on June 5, Snap has posted stiff losses in four of the five sessions, reducing its value from over $21 to under $18.
What’s going on? There are, at least, two possibilities. First, a report came out recently that saw strong media pickup detailing a potential slowdown of Snapchat downloads. Headlines like “Snapchat downloads are dropping off a cliff” aren’t salubrious in the short-term.
And Citi downgraded Snap’s shares. Here’s CBNC on that:
Regarding that final bullet point, it’s correct but incomplete. The number, as of writing, is 38.96 percent. Ouch.
The takeaway from all of this is simple enough: Snap’s debut boded well for unicorn IPOs, money-losing-tech-company IPOs, and consumer-facing digital IPOs. If Snap gives up all post-IPO gains, it could somewhat dampen investor interest in new offerings.
From the Crunchbase Daily:
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