Snap Inc.’s rough week continued Tuesday, as a bank that led its initial public offering slashed its price target for the Snapchat parent’s stock.
Snap shares dropped 7.9% in recent trading to $15.65. A day prior, shares fell below their IPO price of $17 for the first time.
The waning confidence in Snap coincides with a stumble by another recent IPO. In late June, meal-delivery startup Blue Apron Holdings Inc. struggled to find buyers in its stock offering, priced its shares below its initial expectations, and has remained under its IPO price since its second day of trading. Though it isn’t unusual for a newly listed company’s stock to fall below its IPO price, it isn’t a great sign for two high-profile IPOs to be struggling, many traders say.
Snap’s decline on Tuesday came as analysts at Morgan Stanley, one of the lead underwriters on Snap’s IPO, downgraded the company to equal weight from overweight and cut their price target from $28 a share to $16 apiece. Analysts typically assign ratings to companies they follow that indicate whether they recommend investors buy, hold or sell the stocks. Morgan Stanley’s new rating suggests holding on to shares of Snap at a price of $16.
The bank cited increasing competition, noting that Facebook Inc.’s Instagram “has become more aggressive in competing for Snap’s ad dollars.” Morgan Stanley added that, as a result, it expects Snap’s ad revenue growth to be “materially slower” than it previously expected.
Snap shares tumbled…