Snap Inc. (NYSE: SNAP), an American technology and social media company based in LA, saw its shares dip below the original price from when the company went public for the first time on Monday. On Monday, Snap shares closed down 1.1% at $16.99 below the March 1 IPO price of $17. Today, on Tuesday, shares were down 5.5% to $16 after lead underwriter Morgan Stanley, who took Snap public, downgraded the stock.
Known for their product, Snapchat, which is popular among people under 30, Snap has not seen much improvement in user growth and revenue since it went public. The downgrade was based on reports that Snap's ad products are not improving as quickly as expected, including its ad return on investment measurability, which hurts the company's ability to monetize its user base. There were also concerns about its ability to compete with rival social media companies such as Instagram and Facebook, which both have similar features to Snapchat such as posting stories. In June, Instagram said its “Stories” feature had 250 million users while Snapchat only had 166 million users at the end of the first quarter.
Since reaching its all-time high of $29.44 on March 2nd, the second day of trading, Snap’s stock price has been under stress from falling. In the past months, Snap’s stocks have been steadily falling, as it lost about 42% since its early highs. Morgan Stanley also cut its estimates for Snap's 2017 revenue by 6.9 percent to $897 million, and daily active user expectations by 1.6 percent to 182 million.