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Featured On Forbes - Why An Investment In Snap Is Fraught With Risks

Snap Inc's early days as a publicly listed company have been a mixed bag. If stock returns are the barometer of success, you'd have to say Snap's IPO has arguably been a success. The stock trades at just over $20.2 a share, implying a near 19% return for investors who bought into the IPO. Annualized, these returns look even better, given that Snap debuted on the NYSE just about three months ago, in early March. For most investors, these are returns you can't complain about. However, for those who bought shares of the company at levels closer to $30 a piece, the experience hasn't been as pleasant, with buyers at the peak now down by over 31%. And as things stand, the narrative doesn't look great for the company, even after such a big correction.

To be fair, a big part of the correction took place prior to Snap's disappointing earnings release, and you could put that down to profit booking. However, poor quarterly results have played their part as well, and the stock is still down by about 12% since May 10th, when the company reported earnings. Snap missed expectations on most counts, be it bottom line numbers or user growth. The biggest disappointment, though, was the miss on top line numbers. Companies that are valued at close to 24 times projected sales (FY17 estimate at $1 billion) can't afford to miss revenue estimates, and Snap's top management knows that.

Shoring Up Top Line Growth - Are Discounts A Bad Thing? Read the whole post on Forbes.


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