vestors' love affair with Snap Inc disappearing as quick as one of those messages on its Snapchat app. Shares slumping Tuesday to a post IPO low just above $21, which is below the stock's opening price just a few days ago. The hype surrounding the hottest tech IPO in three years, getting deflated by a lack of support from Wall Street's research community.
I'm Conway Gittens in New York. The majority of the six Wall Street analysts covering the stock advising their clients to sell it. And not one of them has a buy rating on the stock. As a matter of fact, one analyst going as far as comparing buying a share of Snap as buying a lottery ticket.
Snap's meteoric rise since going public is certainly flashing warning signals to investors who seem to only now remember the company is losing money and facing slower user growth. That's also caught the attention of short sellers. Those whose trading strategy is centered around betting a stock will lose value in the future, sources tell Reuters demand from that group is surging.
And these growing bets against the stock are coming just as 30 million additional shares could flood the market. Those shares were given to the bankers working on bringing the stock to market and wasn't included in the shares put up for sale last week. And the potential problems don't stop there.
A group of large investors are trying to block Snap from becoming a part of any major stock market index, because they don't like Snap's one share zero vote structure. If the stock is indexed, then large money managers would be forced to buy the stock in order to mimic the index.
Snap, losing nearly $10 billion in market value this week, a loss of more than 20%.