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 5.9% in recent trading to $15.99. A day prior, shares fell below their IPO price of $17 for the first time.
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Tuesday's decline 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. 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.
Morgan Stanley joins other banks that have now tempered their enthusiasm. In March, the average analyst target price was more than $23 a share, according to FactSet. As of July 11, that average target price slipped to a little more than $20 apiece.
Shares of another highly anticipated tech IPO also struggled Tuesday. Blue Apron Holdings Inc.'s stock dropped 6.3% to $7.63 in recent trading, falling further from its $10 IPO price.
It isn't unusual for IPOs to break, or drop below, the price at which shares sold in their IPO. As of July 7, 45% of U.S.-listed companies that went public in 2017 have closed below their IPO prices at some point. More than one-third were still below as of July 7, according to Dealogic.
However it isn't a great sign for two high-profile IPOs to be struggling, many traders say.
Write to Corrie Driebusch at firstname.lastname@example.org
(END) Dow Jones Newswires
July 11, 2017 11:11 ET (15:11 GMT)