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Shares in Snap, the owner of the disappearing message app Snapchat, declined for a second straight day on Tuesday, finishing 10 per cent lower at $21.44 and taking their slide from a $29.44 high on Friday to more than 27 per cent.
The company made its debut on Thursday on the New York Stock Exchange, opening at $24 after listing at $17. In its four trading days it has seen its market value shrink to $24.8bn from a high on Friday of $31.3bn.
Despite the enthusiasm investors showed for the stock in its debut, Wall Street has given it a cold reception, with no “buy” ratings, three “hold” ratings and four “sell”, according to Bloomberg data.
Analyst criticisms have included the size of Snap’s total addressable market – how much revenue a company can hope to reach – which is smaller than Facebook’s, and the company’s inability to prevent competitors from stealing some of its best ideas. For instance, Snap rolled out a ‘stories’ feature that was soon replicated by Facebook’s Instagram.
“We believe Snap has the most innovative culture on the internet today,” said Laura Martin, an analyst at Needham. “The problem is that we believe Snap shareholders pay in full for its missteps, but don’t benefit from the upside of Snap’s genius because competitors can roll out Snap’s best ideas to larger user bases virtually overnight.”
She added: “We worry that Snap is becoming an R&D lab for its competitors.”
Snap offers no voting rights and has said in a filing that its net loss widened to $515m last year, from $373m in 2015.
The sell-off in Snap shares has also come as broader US equities have slipped for two straight days as investors appear to take stock ahead of the Federal Reserve’s monetary policy setting meeting next week, when the central bank is widely expected to lift interest rates.
Snap shares slid another 1.4 per cent after-hours to $21.15.