Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Snap Inc. Fell 23% in July

By Chris Neiger - Aug 8, 2017 at 9:04AM

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

Analysts continued to lose confidence in the social media company last month -- and investors responded accordingly.

What happened

Shares of Snap Inc. (SNAP 3.02%) fell 23.1% last month, according to data provided by S&P Global Market Intelligence, after one analyst downgraded the stock and another lowered his price target for the stock.

So what

The first bit of bad news came as Credit Suisse analyst Stephen Ju lowered his price target from $30 to $25 toward the beginning of the month. Ju said he was concerned with the company's volatile growth, as well as with the fact that Snap insiders would be able to unload some of their shares after a lock-up period expired at the end of July. (When insiders sell shares after a lockup, it can sometimes drive a company's share price down.)

Snap Inc. name on a yellow background.

Image source: Snap.

That news was followed by a downgrade from Snap's IPO underwriter, Morgan Stanley, from overweight to equal weight. Analyst Brian Nowak cut Snap's price target from $28 to $16. and the two bits of bad news were enough to send Snap's shares down 10% in just two days. 

Now what

Snap's shares have lost 45% of their value since the company's IPO back in March, and investors are looking to the company's second-quarter results -- which will be released in just a few days -- to see if Snap is still growing at a healthy clip. With so much doubt about Snap coming from Wall Street and investors, the company will need some impressive results if it's going to put a dent in the negative sentiment. 

Chris Neiger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.
$12.61 (3.02%) $0.37
Morgan Stanley Stock Quote
Morgan Stanley
$91.82 (-0.22%) $0.20

*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 08/16/2022.

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.