For most investors who own the Snap stock, that is bad news as it means the value of their investments has dwindled.
Morgan Stanley’s downgrade is a particularly hard hit for the company as the bank was the lead underwriter for Snap’s IPO, guiding the company through the process and helping determine its initial stock price.
This comes as Snap’s stock fell below its initial public offering issue price for the first time Monday. These days, Snap’s stock price continues to fall, and at around $15.29 at the time of publication, it sits below even the IPO opening price. (SNAP) dipped to a low of $16.95 before closing down 1.1 percent at $16.99 in NY on Monday.
Before this latest update, Snapchat did have some location-based content, mostly surrounding concerts and sporting events but with the expansion of “Snap Maps” the company can offer more location specific advertising options for purchase by advertisers. Benjamin F. Edwards & Company Inc. acquired a new position in shares of Snap during the first quarter worth approximately $158,000. So it’s no surprise that analysts piled on Snap Tuesday after shares sank below their IPO pricing.
Snap has not yet announced a date for its Q2 earnings call, but it will likely be in early August. (NYSE:SNAP) from a sell rating to a hold rating in a research note released on Tuesday. According to the note, Morgan Stanley analysts led by Brian Nowak are now less convinced of Snap’s ability to grow. Today’s slump comes as analysts from Morgan Stanley downgraded SNAP and lowered their revenue forecast for the company. J P Morgan Chase & Co began coverage on shares of Snap in a report on Monday, March 27th.
Many of Snapchat’s IPO backers are now prohibited from selling the stock during its lock-up period, but the expiration of those restrictions is less than three weeks away. Snap’s market now stands at about $16.4 billion, down by nearly half – around $15 billion – from its peak of $31.4 billion the day after its IPO in March. The next day saw an additional 11 percent climb that brought the shares to their all-time high of $27.09.
ILLEGAL ACTIVITY WARNING: “Credit Suisse Group Reiterates “Outperform” Rating for Snap Inc”.
Facebook has aggressively competed with Snapchat in recent months by launching copycat features in Messenger, WhatsApp, Instagram and its flagship app.
The messaging company, which lets users communicate via disappearing photos and videos, is popular with people under 30 but has yet to demonstrate the kind of broad user growth investors have been eager for.