When it comes to IPOs, the gains can be ephemeral like, well, a Snapchat photo. Yes, after last week’s massive gains, Snap Inc (NYSE:SNAP) stock is coming under quite a bit of pressure. Granted, for those who were lucky to get SNAP at the offering price, there is not much to worry about. The gains are still quite lucrative. But, of course, only large institutions and mega wealthy investors got this sweetheart deal. Source: Shutterstock
Predicting such things as the beginning of a downward spiral in Snapchat stock, however, is more akin to gambling than in-depth analysis. Yet, there are still some things to keep in mind when it comes to playing SNAP.
First of all, there has been an avalanche of negative analyst reports. In fact, it’s kind of remarkable that Snapchat stock hasn’t fallen even more. So far, there are no “buy” recommendations. The consensus price target on SNAP shares is only $15.50, which compares to the current market value of $21 (the lowest price target is Pivotal Research Group’s lowly $10). This implies that there could be 26% or more in downside risk. Read