If you purchased shares in Snapchat after the company’s IPO, you are in the red. Deep in the red.
Despite gathering some momentum in recent months, the stock cratered this week. On Tuesday, Snap plunged 20 percent, settling at an all-time low. The pain is continuing on Wednesday as shares are down about one percent.
At the time of this writing, Snap is trading at just under $11. Half of its value has been wiped out.
What drove the crash? The business warned investors of “decelerating” advertising revenue and concerns that growth is non-existent. Plus, according to The Financial Times, there has been user backlash over the redesign.
From the newspaper:
That company’s latest problems owe much to a redesign that Evan Spiegel, Snap’s chief executive, hoped would steal a march on Facebook at a time when the bigger social network was facing a spate of problems. Mr Spiegel split Snapchat’s news feed in two, separating personal communications from other types of content, in a move that he predicted would deal with the fake news and “filter bubble” problems that have hit Facebook.
The move backfired, however, with celebrities who used the app complaining about being shut out of their fans’ personal feeds and strong user and advertiser growth from late last year slowing or reversing.
The company disclosed late on Tuesday that its daily visitor count fell in March, slipping below the 191m average for the first quarter as a whole — though it was still above the average of 187m in the fourth quarter of last year.
Spiegel is probably wishing now that he sold the company to Facebook.
But what do you expect from a company that has yet to post any profit, and likely never will?
Snap is just another sign of the ballooning tech bubble.
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