Snap’s market valuation has dropped from more than $31 billion in the days following its IPO this spring to $19.9 billion as of Monday. The stock closed down 1.1% for the day and hovered just above the $17-per-share mark in after-hours trading.
Investors have grown increasingly concerned over Snapchat’s slowing user growth and revenue. In its first post-IPO earnings report, for the first quarter of 2017, Snap missed Wall Street’s first-quarter expectations and posted a massive $2.2 billion loss, driving shares down more than 20%.
The drop Monday came after Credit Suisse analysts cut their price target on Snap, from $30 to to $25 per share, based on estimates showing a decline in average revenue per user for the second quarter of 2017. The firm maintained its “outperform” rating on the stock.
After an initial surge — Snap shares soared 44% on March 2, the day of its IPO — the stock has steadily faded over the last four months. While Snapchat boasts a millennial-heavy audience for its disappearing-messages and media app, the company has not demonstrated that it will be able to sustain the momentum to justify its sky-high valuation.
Last month Snap was anointed the most-shorted tech IPO so far this year. The comparatively large amount of short-selling on the stock has reflected an expectation among some investors that Snap shares will drop further after insiders, including CEO Evan Spiegel and CTO Bobby Murphy, become free to sell their shares once the post-IPO restriction on their stakes expire July 30.
Analysts have also noted that Spiegel and Murphy together own majority control of voting rights in Snap, meaning investors have no real influence over the company’s strategy.