SNAP Inc shares fell 4 percent yesterday after US securities filings showed some funds dissolving their stakes in the social media company and another brokerage lowered its price target on the stock.
Shares of the Snapchat parent were likely to face new pressure yesterday, when employees for the first time were allowed to sell their stock following the company’s blockbuster initial public offering.
Yesterday was also the deadline for hedge funds and other institutional investors to report their quarter-end holdings of US equities.
Initial securities filings since Friday show Third Point LLC and Temasek Holdings dissolved their stakes in Snap entirely.
The new pressure on Snap’s stock follows a disappointing quarterly report last week that sent it down 14 percent on Friday to a closing low of US$11.83, far below its IPO price of US$17. Yesterday, the shares fell another 3.8 percent to US$11.38 after being among the most actively traded stocks before the market opened.
Wall Street is increasingly worried that Snap is succumbing to competition from Facebook Inc’s Instagram.
Instagram, which has adopted features from Snapchat, has 250 million daily active users, compared with Snapchat’s 173 million at the end of the second quarter, fewer than Wall Street had expected.
Cantor Fitzgerald, which rates the stock “neutral,” lowered its price target to US$15 from US$17.
“We remain on the sidelines until we see signs of re-acceleration in user growth, an inflection on Snap pricing… and/or get closer to the end of the lock-up expiration,” analyst Kip Paulson said in a research note.
Starting yesterday, employees are allowed to sell hundreds of millions of their shares for the first time since Snap’s US$3.4 billion market debut in March, the largest US IPO in years.
That follows an expiry at the end of July on restrictions from early investors owning around 400 million shares.
To try to reassure investors, Snap CEO Evan Spiegel and co-founder Robert Murphy on Thursday committed to not sell any of their combined 422 million shares in 2017.