Investing in SNAP: What to consider
Not unlike other major tech companies, the Snap IPO drew a lot of attention. Reaching a valuation of over $30 billion, the SNAP stock seemed like an alluring investment option. However, after falling 19% below its initial trading price mere days after it went public, the stock caused some concern among investors. It is quite common for a tech company’s stock to fall following the post-IPO boost, and considering the fact similar trends were seen in Twitter and LinkedIn after they went public, Snap Inc. is in good company. Follow SNAP (NYSE: SNAP) publications and financial reports in their Investor Relations Page.
And yet, despite the support it got from traders and investors, Snap, which lost some $514 million in 2016, could be facing harsh times if it fails to continue growing and monetizing. Ahead of the IPO, the company said it may never achieve profitability - but that statement did not deter investors.
Snap Inc. labeled itself a camera company, meaning it could be working on new technologies revolving around its ephemeral messaging app Snapchat and its smartglasses. With nearly 160 million active users and a huge presence in younger markets, there is growth and monetization potential for the company. Since the company did a receive $3 billion acquisition bid from Facebook in 2013, and the latter buying Snap competitor MSQRD, it is possible that many investors are holding the stock waiting for the flip, with the hopes that an acquisition by a major tech player will give them a proper return on investment.
Who should include Snap Inc. in their portfolios?
- Tech traders: Regardless of the rollercoaster seen in SNAP prices in its earlier post-IPO days, it is still a tech company with some innovative technologies. Traders and investors who have faith in the company and the tech sector could be inclined to buy SNAP stocks.
- Those who believe in the Snapchat’s potential: Snap already has the users, it just needs to find a way to better monetize them. If they do, the company’s stock could rise and Snap might position itself in line with the giants of the industry.
- Long-term traders: In the longer haul, there is still a chance that Snap Inc. will be acquired by Facebook or another company who wants its user base and facial recognition technology. If that happens, shareholders might see a major increase in value, and traders might see a spike in price.
What drives Snap’s stock price?
In the days surrounding the IPO, there was much talk and speculation, which affected the SNAP stock price. While some believed it will be the next Facebook, others thought it is wildly overpriced. Speculation aside, there are still real world forces that affect the stock.