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By Noel RandewichSAN FRANCISCO, June 15 (Reuters) - Snap Inc's <SNAP.N>'s
share price fell 3.4 percent on Thursday and was in danger of
falling below its initial public offering price, highlighting
investors' loss of confidence in the social media company that
faces fierce competition from Facebook.
Shares of the owner of Snapchat - a mobile app that allows
users to capture video and pictures that self-destruct after a
few seconds - traded at $17.30, just above the $17-price in its
March initial public offering that was the hottest U.S.
technology listing in years.
The stock traded as high as $29.44 in the days immediately
after its market debut but has since declined. Thursday's price
was the lowest since the IPO.
Snapchat is popular among people under 30 who enjoy applying
bunny faces and vomiting rainbows onto their selfies, but many
on Wall Street are critical of its high valuation, slowing user
growth and lack of profitability. Snap has warned it may never
become profitable.
Those worries increased after Snap's first quarterly report
in May showed declining revenue expansion, disappointing
investors who had hoped the company would surprise them with big
numbers. [nL4N1ID1TY]
Dipping below an IPO price is seen on Wall Street as a
setback to be avoided by chief executives and their
underwriters, but it is not uncommon for Silicon Valley
companies whose market listings have been massively hyped to
investors.
Alibaba <BABA.N> ducked below its IPO price 233 days after
its stock market debut while Facebook <FB.O> dipped below its
IPO price in its second day of trading. Facebook is now up
nearly 300 percent from its IPO.
On June 5, one of the underwriters in Snap's IPO, JPMorgan,
cut its price target on the stock by $2 to $18. Underwriters
Deutsche Bank and Barclays cut their price targets in May.
Adding to potential pressure on Snap, some insiders in the
company's IPO will be free to sell their shares at the end of
July, increasing the supply available to short sellers.
(Reporting by Noel Randewich; Editing by Bernadette Baum)
((noel.randewich@tr.com; Twitter handle: @randewich)(415 677
2542; Reuters Messaging:
noel.randewich.thomsonreuters.com@reuters.net))
Keywords: SNAP STOCKS/