Snap Inc. (NYSE: SNAP) fell back to their Initial public offering price with a 4.9 percent drop in shares. Prices for shares have reflected the social media company’s ongoing competition with Facebook and investors’ concerns as the company is under fire.
Snapchat is a mobile app that allows users to send pictures, videos, and texts that self-expire to other users.
Although prices rose to almost $30 dollars per share days after its initial public offering in March, prices have only declined since then and the company has faced numerous complaints concerning the Snapchat’s lack of growth. Last fall, growth sharply declined to 7% compared to 17% it held earlier last year. Once valued at $25 billion, shares fell to $17.00 (the same price that was set during their initial public offering). All this can be attributed from a lack of innovation and disappointing international expansion.
According to SeekingAlpha, Snapchat lost over $2 billion in its first earnings release as a public company alone. Instead of having essentials funds for marketing and international expansion, most of the money when to compensation expenses.
Although early struggles are not uncommon for Silicon Valley companies, many other mobile apps similar to Snapchat have not been lucrative and overvalued, such as Twitter. Competitors like Facebook are capable of doing all of snapchats functions, along with others, proving the app may not be as profitable as it once seemed.
Despite this huge loss, the company’s chief financial officer, Drew Vollero, believes that the company is “still in investment mode.”