Snap, Inc.
Initially prices surged all the way to $29.44 which fueled interest in social media stocks along with a new push in the IPO markets. That was, and has been short lived though as Snap has never come close to those levels since. The app, which is the main focus for the company at the moment is quite popular among those that are under 30. The price of the stock has been criticized since day one. The company was considered over valued by almost every analyst that made note, but this hasn't stopped Snap, and it hasn't stopped others in the past. So why is a dip in prices such a big deal?
See, this decline doesn't just affect shareholders of Snap, Inc., it affects three different groups. First you have those companies that see how you can issue non-voting shares and the public will gobble them up. Not for long though. This weakness in Snap hurts anyone with those intentions going forward as that could be a reasoning to blame lower prices.
Second you have social media stocks which currently trade at high multiples. This decline in prices of one of the most popular social media apps on the planet makes investors consider their positions in other, over valued social stocks.
The final, and maybe the most important group to be affected in the short term is the IPO markets, and those companies looking to go public at higher valuations. This weakness in Snap will very likely have IPO investors scrutinizing the high valuations of future tech IPO's that have filed. Many of the tech companies that have filed to go public have some pretty lofty price tags on them. If this weakness in Snap continues, and the media continues to focus in on it, those companies may have to adjust.
