snap, snapchat

And Snap stock has continued its tumbling progress towards its IPO price. Amid a slump in the tech market, Snap, which was one of the year’s most awaited tech IPOs, has continued charting a sad path towards its initial price. The stock, which at its zenith had reached almost $30, is currently hovering around at $17. The sad state of affairs appears to have stemmed from Snap’s poor results, exhibited at its latest earnings call, and a generally dismal state o affairs with regards to tech stock.

Indeed, it is a testament to investor faith in Snapchat that the company managed to stay above $20 for this long despite what was undoubtedly, a disastrous earnings report. However, the market is itself not in best shape either. The FAANG stock which includes Facebook, Apple, Amazon, Netflix, and Google, also fell rapidly for a couple of days, leaving investors on the verge of near panic.

And Snap probably jumped up far more than what was being expected. I mean two days into the IPO and the stock almost doubled. So it was only likely that the stock would go into self-correction mode at the first chance it got. And that chance was provided by the earnings report.

So falling stock prices mean several things for the market, and for Snap itself. For the market, new company’s who are looking to make a debut before the public will become more cautious. I mean Snap was being expected to set a benchmark for the likes of Airbnb and Pinterest.So yeah, these companies may start rethinking an IPO just yet and may even consider alternative ways of raising money — such as the direct sale of stock from the company to potential investors.

Also, it might make it harder for the company to attract talent. Companies like Snap often offer prospective employees stock as compensation for their services. Now, a reduces value of each stock means that the offer will become less lucrative, thus making it harder for Snap to hire people.

Leave a Reply

Your email address will not be published. Required fields are marked *