IPO

Snap Shares Break Below IPO Price

Shares of Snap, Inc. broke below their initial public offering (IPO) price, a milestone no company publicly traded likes to see.

Reuters broke the news that Snap’s shares touched an intraday low of $16.95, below the March $17 offer price. The stock price rebounded a bit to end the session at $16.99.

As has been widely reported, Snap’s IPO was among the more publicized and anticipated debuts in the markets in a while. For context, Snap stock’s recent low was off 42 percent from the high seen in the second trading day in March, at $29.44.

The impetus for the decline can be traced to a price target cut from the sell side, via Credit Suisse, where targets were trimmed to $20 from $25. The price target comes amid expectations that shares will be volatile, and a lockup that expires in July might add to that volatility, as 700 million shares are freed up to be traded, wrote the analysts.

More fundamentally, investors have been concerned over user growth (or slowing thereof) and the fact that Snapchat has not, and may never, be profitable.  Facebook has announced that Instagram has, in the last several weeks, debuted its own face-tracking options, with a growing roster of Snapchat-like details.

Volatility has reigned since, though the social media company is not alone in having breached its IPO level, joining Alibaba Group Holding and Facebook, too.  Reuters noted that Facebook has fared well in the wake of that nadir, quadrupuling off of those levels.

In an interview with Reuters, Trip Miller, who is a managing partner with Gullane Capital Partners in Tennessee, said that IPOs “have not done well if you hold them for a year or two. It could be why more and more of these companies remain private and out of the public eye. It is easier to build a company outside of the view of the public.”

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