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Things Are Looking Dire for Snap Inc.

By NexChange
Capital Markets

Snap Inc.’s shares fell below its initial public offering price on Monday for the first time, as Bloomberg reports, and has once again become the favorite stock for invest0rs to short.

Snap’s stock closed down 1.1 percent at $16.99 on Monday, below the $17 IPO price it opened with in March. Although the company’s stock price had previously dipped near its IPO price, Monday was the first time it fell below its offering.

A common concern keeps driving down Snap’s value: The feeling among analysts that the company is facing significant hurdles toward growth, leaving many to believe that its valuation was too high. The news could now get even worse for Snap, as Bloomberg notes.

In its IPO, Venice, California-based Snap drew investors who were enthusiastic about a company popular with young people for sending fun photo and video messages that disappear, and it was intriguing to advertisers who want to reach that elusive audience. But in May, Snap reported earnings and growth in daily active users, or DAUs, that missed analyst estimates, casting doubt over its ability to live up to its more than $20 billion valuation.

About 35 percent of analysts following Snap recommend buying the stock, according to data compiled by Bloomberg. And there could be an additional catalyst to drive the shares down further: On July 30, insiders who had their shares in a lockup after the IPO will start to be able to sell them.

Snap’s struggles has put it back at the top of FIS Astec Analytics’ latest weekly list of the most popular stocks among short sellers, as Benzinga reports. Meanwhile, CNBC‘s Jim Cramer says that a downgrade by Morgan Stanley’s equity research team essentially served as an “obituary” for Snap.

Photo: Getty iStock

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