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As Snap Falls Further, Analyst Says Investors Were Sold 'Snake Oil'
Shares of Snap tumbled 13 percent on Friday after its second quarter earnings were worse than expected, as the company added fewer users and at a slower rate than the previous quarter.
Now, one of the Snap’s biggest detractors is lashing out against the disastrous IPO’s underwriters. Global Equities Research analyst Trip Chowdhry warned investors back in January that Snapchat was “a total junk, hyper-inflated” IPO that should be avoided, as Benzinga reports.
Now that Snap has fallen below its $17 IPO Price – and even below the $12 price that Chowdhry said the IPO was worth back in January – the analyst came out swinging on Friday.
So, what does Chowdhry think of Snap now that it may actually hit that $12 target? On Friday morning in an email to investors, Chowdhry said nothing had changed about his opinion that Snap is “total junk.”
”The underwriters and sell side were just peddling snake oil to the [IPO] investors,” he said.
He compared the stock to Zynga IncZNGA 0.28%, which priced its IPO at $10 back in 2011 and is now trading at around $3.60.
To be sure, while Chowdhry was one of the few early detractors of Snap, he is no longer alone in his criticism. Wall Street is growing upset that Snap is not giving it a clear picture as where to place it, according to CNBC.
“The company’s reluctance to provide guidance is driving the Street to make unachievable forecasts. This is turning strong quarterly performances into disappointments,” Drexel Hamilton analyst Brian White wrote in a note.
The absence of guidance is the latest example of Snap wanting Wall Street’s money but not playing by Wall Street’s rules. Snap remains at odds with index firms and investors over its multiple-class share structure that fails to give most shareholders a voting stake.
Snap’s stock was at $11.83 at the close of trading on Friday.
Photo: Anthony Quintano