Snapchat

Snap stock suffers first major selloff since going public

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Written by Kamil Arli

Market watch reporter Jennifer Booton published an article on the Snap.

The tide continues to shift on shares of Snap Inc. days after its splashy initial public offering.

SHARES OF SNAP INC SNAP…

Shares of Snap Inc. SNAP, +0.13%  fell more than 12% on Monday, reversing two straight sessions of upswings since its market debut. The selloff followed two more bearish initiations on Wall Street, adding to several others that have emerged in the past few days claiming the stock is overvalued.

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Needham analyst Laura Martin initiated coverage on the stock with an underperform rating, which is the equivalent of sell, and a fair value price target range of $19 to $23 a share. She expressed concern that Snap stock could suffer through at least 2019, plagued by decelerating user growth and huge losses that could weigh on its fair value even if sales increase.

THE SEXIER AND MORE GLAMOROUS A COMPANY’S IPO

“The sexier and more glamorous a company’s IPO, the more likely it is to be overpriced at its IPO date and to suffer meaningful downwards earnings and valuation revisions in the first 8 quarters after it goes public,” said Martin, citing “academic literature.”

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CFRA Research analyst Scott Kessler initiated coverage with a sell rating and $22 target.

A number of analysts in recent days have expressed concern that Snap stock is overvalued, particularly when it was trading well above its IPO price in the high-$20s range. The average rating on the stock among a poll of six analysts surveyed by FactSet is the equivalent to sell, while the average price target is $16.50, below Snap’s IPO price.

About the author

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Kamil Arli

Editor of DigitalReview.co. Digital Media Consultant

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