Snap's share price fell 3.4 percent on Thursday and was in danger of falling below its initial public offering price, highlighting investors' loss of confidence in the social media company that faces fierce competition from Facebook.
Shares of the owner of Snapchat — a mobile app that allows users to capture video and pictures that self-destruct after a few seconds — traded at $17.30, just above the $17-price in its March initial public offering that was the hottest U.S. technology listing in years.
The stock traded as high as $29.44 in the days immediately after its market debut but has since declined. Thursday's price was the lowest since the IPO.
Snapchat is popular among people under 30 who enjoy applying bunny faces and vomiting rainbows onto their selfies, but many on Wall Street are critical of its high valuation, slowing user
growth and lack of profitability. Snap has warned it may never become profitable.
Those worries increased after Snap's first quarterly report in May showed declining revenue expansion, disappointing investors who had hoped the company would surprise them with big
Dipping below an IPO price is seen on Wall Street as a setback to be avoided by chief executives and their underwriters, but it is not uncommon for Silicon Valley companies whose market listings have been massively hyped to investors.
Alibaba ducked below its IPO price 233 days after its stock market debut while Facebook dipped below its IPO price in its second day of trading. Facebook is now up nearly 300 percent from its IPO.
On June 5, one of the underwriters in Snap's IPO, JPMorgan, cut its price target on the stock by $2 to $18. Underwriters Deutsche Bank and Barclays cut their price targets in May.
Adding to potential pressure on Snap, some insiders in the company's IPO will be free to sell their shares at the end of July, increasing the supply available to short sellers.