Snapchat Stock Closes Below IPO Price Amid Growth, Investor Fears

Snapchat’s stock price has fallen below its IPO for the first time amid speculation that the company won’t grow as quickly as expected and amid. This comes just ahead of the lockup period at the end of the month in which insiders can begin selling their shares.

Shares of Snap Inc. (SNAP) dipped to a low of $16.95 before closing down 1.1 percent at $16.99 in New York on Monday. Snapchat’s initial public offering on March 1 was set at $17. Snap shares ended their first day of trading on March 2 up 44 percent at a value of $24.48. The stock hit its high of $29.44 on March 3.

Read: Snapchat IPO: Shares At $17 Each, $24 Billion Valuation

The Venice, California-based company has been the target of skeptics since its more than $24 billion valuation in March -- the largest tech IPO in the U.S. since Alibaba -- was followed up by slow growth in daily active users (DAUs) and reported earnings.

The decrease is part of a larger slide in tech stocks generally, although the social network known for its disappearing videos may soon see investors do the same if they’re unable to prove their advertisements are as stable as Facebook’s – and not just an experiment. Facebook has also forced Snap to continually transform as it mimics many of its most successful features, such as Instagram's Stories function. Inside investors can begin to sell off their shares of the stock starting on July 30. Nearly 35 percent of analysts who follow Snap still recommend buying the stock, according to a Bloomberg data compilation.

“With market fears running rampant around Snap’s DAU growth, the lock-up expirations this summer and increased competition from Facebook, sentiment around Snap remains at ghastly levels,” Brian White, a Drexel Hamilton LLC analyst, wrote in a June 29 note.

Twitter, Facebook and LinkedIn fell an average of 24 percent in the 30 days before the end of their so-called lockup period for company insiders, according to MKM Partners data. Snap shares have dropped almost 19 percent in the past three months, with 6 percent of that fall coming in the past month.

“The pace of growth in monetization may not be as fast as we originally modeled,” Mark May, an analyst at Citigroup Inc., said in a note to Bloomberg last month, downgrading the stock. “We expect user growth will remain modest near-term.”