Shares of Snap Inc inched down below their IPO price of $17 per share for the first time since its initial public offering launch last March. On Monday, the stock slumped by 1.1% to $16.99 going below its IPO price of $17.
Snap shares have also declined by more than 30% since its IPO and have missed most analysts forecasts during its first earnings report as a public company last May. During its Q1 earnings, the company delivered a continuous with its user growth. The then much-awaited technology IPO delivered a lower earnings of $0.90 per user compared to the previous quarter’s earnings of $1.05.
The company which initially priced their IPO at around $17 traded as much as $24-$26 or 45% higher during their launch last March sending its market valuation by as much as $29.1 billion.
Snap recorded an all-time high of $29.44 a day after its IPO. However, the stock started to descend in a downward direction since. Investors did not originally expect to create profits from Snap’s IPO as the company was exhibiting huge operating losses due to their continuous expansion.
The Snapchat-parent company received a price target cut from analysts from $30 to $25. The company which is most popular for its Snapchat application has been showing a slowdown in its user growth in the past couple of months.
The shares of the company have also lost ground continuously after reports showed that daily downloads of the Snapchat application slumped by 22% year over year during the first two months of the second quarter.
Investors have also taken note of Instagram’s growing popularity especially after it rolled out a similar feature to that of Snapchat a few months ago. Instagram which is owned by Facebook also launched a disappearing photo and video feature on its messaging application. Investors are also concerned to whether how the company can still offer profitability to its investors in the coming quarters.
The company has made various startup acquisitions in the past in hopes of expanding its advertising services to companies and in increasing its overall users. Last month, it acquired Placed which is a startup company focusing on advertising analytics for an estimated amount of $125 million to $200 million. Although it was not announced specifically to why the company has made such acquisition, investors perceived the move as an effort to bring Snapchat’s platform into the advertising bubble where businesses can place their advertisements which will mean another revenue stream for Snap Inc.