Kylie Jenner hands Snapchat short sellers a fortune
While Snap shares took a beating Thursday, falling more than 6% and wiping out nearly $1.3 billion of market value after its top user -- reality star Kylie Jenner --- tweeted that she no longer uses the app, some investors actually laughed all the way to the bank.
According to data compiled by financial analytics firm S3 Partners, short sellers, traders who were betting on Snap’s decline for some time, made more than $163 million on Thursday as Snap shares plummeted throughout the day.
But it wasn’t just Thursday’s sell-off that gave Snap skeptics a boost; short sellers have made more than $256 million on a mark-to-market basis so far this year.
Matthew Unterman, an analyst for S3 partners, said while Jenner’s tweet definitely contributed to the downward spiral of the stock, there was already a significant amount of negative reviews by users in recent months that sparked concern among traders.
“This compelled a few analysts to downgrade the stock and lower price targets on the back of potential fewer user engagement, and hence revenues. So Kylie’s tweet and influence was a trigger for some traders to push the sell button,” Unterman told Fox Business, noting that February has been a "very wild ride" for bearish speculators of Snap.
In the following weeks, Unterman added that he has witnessed short sellers covering their positions and trimming their exposure, and when Jenner fired off that tweet on Wednesday, it helped shorts recoup some of the losses they incurred earlier in the month.
Jenner, named the No. 1 most-viewed person on Snap in 2015, tweeted Wednesday that she hasn’t touch the app in recent weeks.
"Sooo does anyone else not open Snapchat anymore? Or is it just me... ugh this is so sad," Jenner tweeted.
The tweet got more than 319,000 likes and 62,000 retweets with several fans chiming in, tweeting back that they feel the same way and ultimately blame the app’s new redesign that debuted late last year.
“Omg same, I just feel my life incomplete but I must open it. This is my protest to Snapchat to me to have old snap back,” one fan tweeted.
The redesign was part of the company’s attempt to make it more approachable for new users and attract more advertisers but it has gotten harsh backlash from existing users, even igniting them to create a change.org petition that now has more than 1.2 million signatures.
Representatives from Kylie Jenner and Snap did not immediately respond to FOX Business’ request for comment.