Snap is being sued by shareholders who claim the company provided misleading Snapchat usage statistics in the run-up to the IPO. The company, however, denies such claims.
Amidst this legal complication, share prices of the Los Angeles based company, Snap Inc., the parent company for Snapchat, witnessed a major price dip. The share prices on Monday traded as low as $16.95 before closing at $16.99, down about 1.1% from its IPO price. The company went public in March at the share price of $17.
Falling below an IPO price for the first time is a phase most companies go through. Facebook, Twitter, Tesla and Fitbit also saw their stocks dip below their IPO offerings for long periods of time. This is a signal to investors, pointing to waning confidence in the Snapchat app-maker’s ability to deliver on promises of increased usage and ad sales in the coming years.
Snap’s share prices are speculated to fall further below its IPO. While many of Snapchat’s IPO backers are currently prohibited from selling the stock during what’s known as a lock-up period, the expiration of those restrictions ends on July 29. If the trend continues, we could expect many investors to sell out their stakes in the company.
Here is a graph of Snap’s market performance over the last few months:
Megha Shah for TechFunnel.com