Written by Felix Richter, Statista.com
— this post authored by Felix Richter with added content from Econintersect
After a disappointing first quarterly earnings report, Snap’s (NASDAQ:SNAP) share price fell sharply.
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The company’s stock price was down 20 percent in early trading on Thursday May 10 and its getting dangerously close to dropping below its IPO price of $17 for the first time.
As our chart illustrates, many tech companies that went public this decade fell below that symbolic mark sooner or later, the question being whether or not they are able to come back up. While Facebook did so in impressive fashion and is currently trading at nearly four times its former IPO price, many others have yet to recover and maybe never will.
Some analysts are already predicting a similar fate for Snap, which has yet to prove it is really worth its current market capitalization of more than $20 billion. Still far from profitable, the only thing that could justify the company’s lofty valuation would be explosive growth. Many investors had hoped for that to show in yesterday’s results, but as the numbers fell short of expectations, many are now jumping ship.
This chart shows how long it took for the share prices of tech companies to drop below their respective IPO price for the first time.
You will find more statistics at Statista.
Econintersect added content
Our last report on Snapchat (May 16) noted:
So investors are staying with SNAP as a growth story even though positive earnings seem far in the future, if ever. But if the earlier higher growth rates do not return and the slowing growth rates of the last 3 quarters is the new pattern for SNAP, how long will investors continue to support the stock price?
Well, investors are sticking with Snapchat at least for another week, Here is the chart for SNAP showing very stable pricing and low trading volumes 16 May through 23 May:
