Snap Stock Crashes Back To Its Irrationally High IPO Price

Why dally on the road to becoming a $5 stock for day-traders?
Author:
Publish date:
Updated on

It's almost as if Snap was a stock trading at more than 20 times its expected revenue without having a concrete revenue plan or a business model that isn't being torn apart with sadistic slowness by its largest competitor...

SnapchatIPO

Shares of Snap Inc. dropped 4.5 percent on Thursday and briefly touched its initial public offering price, highlighting investors' loss of confidence in the social media company that faces fierce competition from Facebook.
The stock of the owner of Snapchat - a mobile app that lets users capture video and pictures that self-destruct after a few seconds - momentarily traded at $17.00 on Thursday, the price in its March initial public offering that was the hottest U.S. technology listing in years.

And please, take this moment tell us all about how tech stocks snap back because they're just too hyped and not ready to live on their own yet. Snap isn't buttfumbling life as a public company because it's learning to be a public company, it's because Snap is, for all intents and purposes, a private company with a stock ticker.

You've essentially got the bros who started it, refused to sell it to Facebook, forgot to somehow protect themselves from Facebook's wrath, without ever building a genuine revenue engine, still making all decisions free from any shareholder input. It's a recipe for disaster that's already been mise en place-d...and the oven is preheated.

Which is perhaps why a lot of people are acting as if they really don't think Snap is snapping back:

Since May, the interest rate that short sellers pay to borrow shares of Snap has jumped to 42 percent a year, according to Astec Analytics. Some insiders in Snap's IPO will be free to sell their shares at the end of July, increasing the supply available to short sellers.
The Advisor Shares Ranger Equity Bear ETF made money selling Snap after its IPO and buying the shares back after its disappointing quarterly report.
Portfolio manager Brad Lamensdorf said he would consider shorting Snap again once more shares hit the market.
"Its price-to-sales ratio is just so freaking high," Lamensdorf said.

Listen, there's a lot going on in the world right now and we're all just a little too overwhelmed to take on more psychic baggage. So why don't we all just save ourselves the time and energy of slowing Snap's inevitable slide into life as a $5 stock for day traders?

Snap's stock price sinks to IPO price [Reuters]

Related