Snap Inc (NASDAQ:SNAP) exactly been a market favorite since going public earlier on this year, but things have been looking decidedly worse in recent days. The firm, which relies almost entirely on its messaging app for growth, has lost more than 15 percent of its value over the last month. On Wednesday the firm announced a bevy of new features. Unfortunately, the press reaction has been decidedly unexcited.
Snap will add the ability to put links into its app. That makes it look, in the words of
The launch of the linking feature tells us two major things about Snap Inc (NASDAQ:SNAP). The firm isn’t really sure how to grow audience and engagement from here, and the firm doesn’t have a unique or novel path to monetization.
Snap chat might be chasing the news
The most interesting take on the link change came from Advertising Age‘s Marty Swant. For publishers, in Mr. Swant’s view at least, this could be a massive opportunity.
That could be important not only for news publishers, but also for Snap Inc itself. The firm’s rivals Facebook and Alphabet Inc have both managed to boost income by playing to content publishers. Becoming a major source of organic traffic for news and other types of content can be a major boon to revenues if publishers become interested.
Snap Inc (NASDAQ:SNAP) promises a creative experience, but in reality it has one of the more tightly controlled formats out there. With the addition of user added links that could change.
Snap Inc stock sinks on growth outlook
The real reason that those holding Snap stock can’t get a break is that Wall Street doesn’t believe the firm can really keep growing. That’s a big issue for any sort of social media company. There are also, as with similar firm Twitter Inc, a great deal of worries about the firm’s ability to monetize its current user base.
Another factor weighing on the minds of traders is the expiry of the Snap Inc stock lockup. That’s the period in which those that held shares pre-IPO i.e. employees, early investors, are blocked from selling shares. Some analysts are worried that the end of that period will bring a good deal of downside to the stock.
Nomura analyst Anthony DiClemente told CNBC last month “I think there’s going to be pressure on the stock ahead and through the lockup. It’s dramatically overvalued.” He has a $14 price target on Snap Inc shares.
When the lock up expired on Twitter Inc (NYSE:TWTR) shares, a company that looked about as weak as Snapchat when the moment came, shares dropped to a new low. Though there may be some pressure, however, this is far from an iron market law. Facebook Inc (NASDAQ:FB) stock, despite much speculation to the contrary, actually saw a rise in value when its lock up period expired.