Snap Inc. (SNAP, Financial) stock is down 19% in March following the social media platform's massive initial public offering to start the month. The company's stock is down over 33% from its peak during the second day of trading. Evan Spiegel, the 26-year-old CEO of the company, lost over $2 billion since it reached its peak on the second day of trading.
Investors quickly picked up the stock, causing shares to skyrocket 44% before plummeting. Analysts assigned a sell rating to the stock nearly two weeks after the IPO.
Spiegel, co-founder and CEO, owns 200 million shares in the company, with his fortune growing to $6 billion days after Snap went public. The CEO also received $850 million in bonuses for bringing the company public. The CEO's wealth, down $2 billion, may be understated due to his ownership of Class C shares.
Aeisha Mastagni, California State Teachers' Retirement System's portfolio manager, said, "There is a line in the sand, and Snap crossed it. We don't want Snap to set a precedent."
Mastagni's statement refers to the company's co-founders retaining over 90% voting power following the IPO. The company is the first in recent history to offer only non-voting shares when going public. Investors note many companies offering a dual-class structure succeed, but crash and burn in the long term.
Tai Lopez, investor, partner and advisor to many multimillion-dollar businesses, said, "I actually think Instagram stories and Snapchat are more powerful than anything, other than YouTube." The social media expert is famous for Tai Lopez's 67 steps program and a growing YouTube video empire with 1.6 billion minutes watched.
Lopez's confidence is not met with the same enthusiasm from investors.
ESG Investment's Rakhi Kumar said, "Your voice is as loud as your controlling interest in the company." Voting shares allow investors to have a greater say in the direction of a company. Snap's failure to offer controlling shares leave the fate of the company largely in the hands of its two founders.
Analyst James Cakmak is bullish on the company and considers Snap a buy. Cakmak believes the company's app has the potential to replace the camera despite stories only lasting for 24 hours. He suggests the company will move toward a portal that offers video, mobile content and pictures to act as a digital television station of sorts.
He sets the company's price target at $25.
Low revenue and large losses threaten the social media company. The company posted revenue of $404.5 million, up from $58.7 million in 2015. Net losses grew to $514.6 million in 2016. The company previously warned it may never maintain or achieve profitability.
Facebook (FB, Financial) remains the company's biggest threat, with the social media giant copying many of Snap's features and implementing them in its Instagram platform. Facebook has the resources and revenue to continue competing against Snap and lure in users to its Instagram platform.
Investors fear the company's stock price will plummet during earnings season.
The company's resurgence on Monday comes as Cakmak is the first analyst to consider the company a buy, raising investor sentiment in the "camera company."
Disclosure: The writer does not own any shares in the listed stock.
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