Update : It happened! Snap fell down to its IPO price( for a few seconds) of $17 per share after its continued steady procession south over the past several weeks. The company is now barely holding simply above its IPO price.
Snaps last earnings report resulted in a disaster, and while the company still managed to stay above $20 for an extended period of time, a string of bad days for the market and likely increased skepticism for the companys future among the rest of the bundle of growth stocks is putting increased pressure on its price. There have been a slew of smaller IPOs since Snap as more and more companies try to get off the gate, but especially for non-traditional ad-driven companies( looking at Pinterest, for example ), it may affect the future of the so-called IPO window being open.
Were going to get another heat check on investor craving in the next few weeks with Blue Apron, which filed to go public earlier this month. Like Snap, Blue Apron a snack delivery services that are as much a consumer service as it is a complex logistical operation showed a growing business while logging a major loss in the most recent one-quarter. But Blue Apron also demonstrated it at the least has the capability of being profitable, with a$ 3 million profit in the first quarter last year.
This major deterioration might not be something thats wrong on an absolute basis, since $17 is the price that Snap selected as a company going public. But these prices are set to raise as much fund because they can while ensuring a pop of around 20% or more, attaining sure investors have an opportunity to lock up some gains. So, for the most component, we can call Snaps IPO a success devoted its pop, even though the companys shares have come crashing down to ground. Its not great for the rest of the person or persons that got into Snap, and it surely isnt good for the perception of the company as a potential growth stock like the traditional FANG( Facebook, Amazon, Netflix and Google) bundle.
There are some implications for Snaps stock decline namely, a lower stock cost can make it harder to attract talent because compensation packages tied to those costs start to become less valuable. Snap faces competitor from other networks like Facebook, which is increasingly copying Snaps portfolio of the characteristics and products. Imitation is the sincerest form of flattery, but for a company that is trying to pitching to advertisers that its a unique prospect with high involvement, having a massive company with resources and a known ad product can induce life increasingly difficult.
The stock continuing to tumble further below $17 is, of course, a Very Bad Sign both for Snap and companies trying to offer new various kinds of ad pitches beyond Facebook and Google. But it did make a quick rebound after hitting $17 for a very brief moment in time. The marketplace in general has had a bad few days, so well see how this kind of behavior lasts.
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