Thursday, March 2, 2017

Shorting SNAP

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.

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