Shares of Snap (SNAP - Free Report) fell to a new all-time low again on Thursday, a feat that is becoming a common occurrence for the stock.
Snap was down over 2% in early afternoon trading after it dipped below $12 per share for the first time ever on Thursday morning. The company’s stock dropped to a new all-time intraday low of $11.90 per share, but it has bounced back since then and now is almost flat on the day.
Snap is currently a Zacks Rank #4 (Sell) and scored an “F” grade for Value and a “D” for Growth in our Style Scores system.
Now investors begin to look towards Snap’s fundamentals to see if the company and its stock have long-term staying power.
Most Recent News
Evan Spiegel’s disappearing photo and video app company’s stock price continues to vanish before his eyes. But what he and investors might care more about is the fact that advertisers are reportedly leaving as well.
According to a recent CNBC report, many big advertising agencies have seen their clients move away from Snapchat.
Many advertisers complain that Snap does not provide any real measurable and reliable metrics or data to warrant spending on the platform. Snapchat doesn’t provide follower totals, while its main rival Instagram gives exact numbers—which helps advertisers know the possible reach an ad or sponsored post might have.
It is also harder to find new content, as well as people and companies, to follow on Snapchat than it is on Instagram.
What might be even worse is the negative perception that is starting to brew. Trend Pie CEO Victor Ricci told CNBC that some brands believe Snapchat is dying and they don’t want to be associated with the app anymore.
On top of that, celebrities and influencers, who help advertisers immensely in the social media world, have started to move to Instagram and its Stories feature to promote their brands and companies.
Spiegel and co-founder Bobby Murphy structured Snap’s IPO to retain control over the company, which others have done—including Facebook (F - Free Report) and Alphabet (GOOGL - Free Report) . However, on Tuesday, S&P Dow Jones Indices announced it would prevent companies that issue multiple classes of shares from trading on some indexes.
Snap’s common shares offer no voting power, and now the company will be excluded from being included in most major S&P indexes because of this. However, Facebook, Alphabet, and Berkshire Hathaway —which all operate in a similar manner—won’t be affected.
Aside from the prestige that comes along with being listed on these indexes, Snap will likely be hurt financially as passively managed funds, which operate heavily in these indexes, become more popular.
Its New Rival Is Winning
Instagram Stories celebrated its one-year anniversary yesterday. And Snapchat’s main competition for users and advertising dollars has already surpassed it in one vital user metric.
Instagram’s Stories feature, which is a blatant copy of Snapchat’s tool with the same name, now boasts 250 million daily active users, and it jumped from 200 to 250 million DAUs faster than it climbed from 150 to 200 million.
Based on its May report, Snapchat added 8 million total users in the first-quarter, which brought its total to 166 million DAUs.
Snap is now reportedly thinking of acquiring Chinese drone maker Zero Zero Robotics for an estimated $150 million to $200 million. The company makes $500 foldable drones that allow users to take selfie videos.
It seems that Snap might be trying anything it can to appeal to investors as its stock price continues to fall. Snap is set to report on August 10.
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