Snap Shares Tumble Further Below IPO Price
July 11 2017 - 11:26AM
Dow Jones News
By Corrie Driebusch
Snap Inc.'s rough week continued Tuesday, as a bank that led its
initial public offering slashed its price target for the Snapchat
parent's stock.
Snap shares dropped 5.9% in recent trading to $15.99. A day
prior, shares fell below their IPO price of $17 for the first
time.
Tuesday's decline came as analysts at Morgan Stanley, one of the
lead underwriters on Snap's IPO, downgraded the company to equal
weight from overweight and cut their price target from $28 a share
to $16 apiece. The bank cited increasing competition, noting that
Facebook Inc.'s Instagram "has become more aggressive in competing
for Snap's ad dollars." Morgan Stanley added that, as a result, it
expects Snap's ad revenue growth to be "materially slower" than it
previously expected.
Morgan Stanley joins other banks that have now tempered their
enthusiasm. In March, the average analyst target price was more
than $23 a share, according to FactSet. As of July 11, that average
target price slipped to a little more than $20 apiece.
Shares of another highly anticipated tech IPO also struggled
Tuesday. Blue Apron Holdings Inc.'s stock dropped 6.3% to $7.63 in
recent trading, falling further from its $10 IPO price.
It isn't unusual for IPOs to break, or drop below, the price at
which shares sold in their IPO. As of July 7, 45% of U.S.-listed
companies that went public in 2017 have closed below their IPO
prices at some point. More than one-third were still below as of
July 7, according to Dealogic.
However it isn't a great sign for two high-profile IPOs to be
struggling, many traders say.
Write to Corrie Driebusch at corrie.driebusch@wsj.com
(END) Dow Jones Newswires
July 11, 2017 11:11 ET (15:11 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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