Snap, the business behind the popular photo messaging app Snapchat, went public on the New York Stock Exchange on March 2nd, and at first, gained a lot of value on its initial $25 (USD) share price, jumping by 70% in the first couple of days it was available to buy.
Reports showed that the majority of investors in Snap were millennials – that is, people born between the early 1980s and early 2000s who now make up the 18-34 age group. The median age of Snap share buyers was reported by the New York Post as being 26 – which is actually the same age as Evan Spiegel, who is the CEO of Snap. There was a lot of buying activity on platforms aimed at millennial investors, such as Robinhood and Stockpile, as well as more universally appealing financial trading platforms. It is thought that the reasons why young and often new investors opted to buy Snap shares are more around their affinity with the brand, and a desire to own shares in businesses they find relatable and interesting to follow, as well as wanting to get in on what might be the newest hot internet share.
However, as the initial buying activity ceased following the first couple of days trading, Snap shares began to slump quite dramatically, dropping as low as $19.26 on March 17th. Those who bought at the high of $27.89 on March 3rd saw a huge amount of the value lost. This, many people felt, was inevitable, given that Snap have not announced profits yet and like many other high valued social media shares, offer a free service, so it is difficult to ascertain where and how they make their money without an official profit release to go on.
Wall Street's 'Neutral' Stance
However, prices did begin to recover this week, as a number of Wall Street Analysts, including Piper Jaffray on Thursday, announced a neutral position on Snap. The shares in the company closed on Thursday evening at $23.18, which, while still below the initial price, is a jump of 6% on the previous day, when it had in turn jumped 7% on Tuesday's price. Piper Jaffray's reasoning for the neutral position was that while Snap has potential, investors should be interested in whether or not they can fend off any attempts at 'copycat' offerings – for example if Facebook Messenger were to introduce a mode of messaging that works in a similar way to Snapchat (with messages disappearing after a fixed time).
At the moment, there are plenty of successful products that allow users to share photos, for example privately via Messenger or to larger groups via Instagram, however Snapchat's USP is the fact that its messages are not permanently saved – something that has proven popular with younger social media users concerned about the permanence of their online activity.
It will be interesting to see how Snap's shares continue to perform, particularly once profits have been released by the business.