Snap Could Dive Even Lower
What the Employee Share Lockup Expiration Means
Snap Inc. (SNAP), the parent company of the popular social app Snapchat and the creator of the wearable video-recording Spectacles, just recently had its IPO on March 2nd. At the time of IPO, the company was valued at $24 per share. Since then, however, the Los Angeles technology company has seen a constant decrease in value. As an example, the current share price of the company is $13.91 at the time of this writing.
Although the company is seeing a price drop close to 50% over the course of 6 months, it must be noted that the share price may see an even more aggresive drop in value. This is because Snap Inc.’s lockup period expires on Saturday July 29, 2017.
IPO Lockup
A period after the IPO of a company during which employees and early investors in the company are not allowed to sell their shares to the public.
Because Snap’s IPO lockup expires on July 29, employees and early investors will likely rush to sell their shares to the public on Monday July 31st. This sudden increase in shares offered to the public will cause the price per share to suddenly decrease. Some market researchers speculate that the volatility could even cause the price to decrease by 15% (to $11.83).
As you may think, this could make Snap’s price per share become dirt cheap. Because of this, July 31 and August 1 might be some of the most opportune days to buy into Snap shares.
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