Snap Set-Up For IPO Trap
Shares surge nearly 50% after going public.
Valuation more than 3 times that of Twitter.
Cash burn and slowing user growth will hurt in coming quarters.
Thursday's biggest winner so far is a company in its first day of trade, camera company Snap (NYSE:SNAP). Shares have surged nearly 50% at this point, even after the IPO was priced above the high end of the indicated range. With a move like this, investors should be very careful, especially given some troubling metrics.
Snapchat IPO: Lofty Snap Inc (SNAP) Walks on Eggshells
Well, as I’ve noted before, the Snapchat IPO is likely to provide plenty of opportunities for short-term traders. Just some of the reasons include:
The float is relatively small at 200 million shares. And 50 million will be locked-up for one year. As a result, it will not take much buying to move SNAP stock.
The markets are extremely bullish right now. So investors generally have a healthy appetite to take on risks.
There has been a dearth of hot IPOs. In other words, there is little choice, but for investors to focus on SNAP stock.