Please ensure Javascript is enabled for purposes of website accessibility

Snap Stock: Next Stop, $11?

By Rick Munarriz – Updated Jul 20, 2017 at 1:20PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Another bearish analyst chimes in on Snapchat's parent with a pre-teen price target, but NBC News and Amazon offer glimmers of hope.

Snap, Inc. (SNAP -1.34%) finally became a busted IPO last week, and now it seems like it's in a race to the bottom. Shares of Snapchat's parent company fell in 10 of 12 trading days before bouncing back slightly on Wednesday, but that $17 debutante price seems so far away at the moment.

MoffettNathanson analyst Michael Nathanson feels that we still haven't hit bottom, reiterating his bearish sell rating on Wednesday. He's one of many Wall Street pros that have pointed to the July 30 lock-up expiration that will free many pre-IPO shares to be sold in the open market as problematic. Nathanson is also disheartened to see Snap blaming seasonality for its recent growth challenges. He feels that the lock-up expiration and decelerating growth can push the stock down to his target of $11, implying another 27% of downside even after the recent slide.

Snapchat's Memories feature on a smartphone app.

Image source: Snap, Inc.

Snap until it breaks 

It may seem odd to see Snap's slide coming just as the world's most valuable consumer tech company is working on what is now a nine-day winning streak, but that just goes to show how a tech bellwether's good fortune can't save a broken IPO. The market's trying to wipe itself clean of Snap's early March offering, and even its largest lead underwriter has cooled on the stock this month.

The news wasn't all bad on Wednesday, likely explaining why the stock moved higher -- rare trading day victory for Snap stock -- despite the bearish analyst note out of MoffettNathanson earlier in the day.

Reuters reported that Comcast's (CMCSA -1.94%) NBC News is rolling out a news show on Snapchat that will push out fresh updates twice a day. The brief segments will last no more than three to four minutes, clearly trying to appeal to the short attention spans of Snapchat users who are used to their media blasts coming in short spurts.

The news makes sense. Comcast invested $500 million in Snap's IPO, trying to stay close to millennials who are shying away from most traditional ad-based TV offerings.

Another interesting development on Wednesday -- reported initially by Recode -- is that (AMZN -3.01%) is now offering Snap's Spectacles. The sunglasses with cameras that can record clips as long as 30 seconds haven't been material contributors to Snap's financials, but Spectacles is an important product for a company that's trying to differentiate its platform through an aggressively priced hardware product, something that Amazon investors can appreciate given how Amazon has taken a similar approach with most of its hardware offerings. 

Snap's stock is clearly in a funk. The short-lived dot-com darling has seen its shares lose more than half of their value since peaking the day Snap went public. With support at its $17 IPO price seemingly gone and a poorly received first quarterly report as a public company, there's a lot to prove for a company as it approaches the lock-up expiration and its second-quarter report later this summer.  

Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Snap Inc. Stock Quote
Snap Inc.
$10.32 (-1.34%) $0.14, Inc. Stock Quote, Inc.
$113.78 (-3.01%) $-3.53
Comcast Corporation Stock Quote
Comcast Corporation
$31.84 (-1.94%) $0.63

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.