That didn’t take so long!
Last week, Snap Inc (NYSE:SNAP) was celebrated all over the world after filing an immense initial public offering (IPO). Snapchat shares then soared to as high as $29.44, making a lot of investors and groups a ton of money.
The hype is over and now Snapchat has crashed into a bear market. Snapchat has plummeted more than 11 percent to under $22 since Monday has plunged 23 percent from Friday’s highs. Indeed, there is still plenty of more room to slash its share price.
But this shouldn’t be a surprise to anyone. To date, when it comes to Wall Street ratings, there are five sells, two holds and absolutely zero buys.
This is exactly what happens when the stock market is in an obvious bubble. Akin to the days of the dot-com bubble, social media companies are capturing multi-billion-dollar IPOs, even though they are unprofitable and will never turn out a single penny in profits.
Snapchat lost $514 million in 2016, and warned that it “may never be profitable.” Despite this, Snapchat raked in more than $3 billion in its IPO as traders wanted a “lottery-like stock.” Now, all of the post-IPO buyers are in the red.