Snap Stock Is This Close to Being a Broken IPO

As bad as sentiment has gotten for Snap, Inc. (NYSE: SNAP) since it went public four months ago, the market laggard has yet to buckle below its $17 IPO price. It hit intraday lows of $17 on back-to-back days last month, and traded at $17 and change in May, only to bounce off of those marks.

Things can naturally be different this time. The stock hit an intraday low of $17.02 on Monday, and it's certainly possible that the stock may be trading south of $17 by the time you read this. Between concerns about a lock-up expiration looming later this month and even bullish analysts starting to temper their enthusiasm, it's hard to get excited about the photo- and video-clip-sharing specialist.

It's not easy to fix something that's broken

Credit Suisse analyst Stephen Ju became the latest Wall Street pro to cool on Snap shares. He's sticking to his outperform rating on the stock, but lowering his price target from $30 to $25 on Monday. He sees volatility in the stock given its lumpy growth and the late-July lock-up expiration that will see more than 700 million shares eligible to hit the public float.

Adding salt to the wound, Ju is also raising his price target on Facebook (NASDAQ: FB) from $175 to $180. Facebook and its Instagram subsidiary continue to roll out Snapchat-like features. They say imitation is the sincerest form of flattery, but when Instagram is growing faster than Snapchat, it's more of a competitive threat than high praise. Instagram beat Snapchat in growing its user base to 200 million active users earlier this year.

Snap isn't phoning it in, so to speak. It keeps rolling out new features for users and advertisers. Usage growth may be decelerating, but it still has a strong grip on millennials, who aren't always easy for marketers to reach in this era of cord-cutting.

Snap will have to impress investors in a few weeks when it posts its second quarterly report as a public company. It bombed the first time out. However, if there's any consolation to Snap stock breaking below $17, it's that Facebook also fell below its IPO price a few months after it went public. Facebook has gone on to become one of the tech world's biggest winners. It wouldn't be a bad time for Snap to be the one copying Facebook -- as a bounce-back dot-com story.

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Rick Munarriz has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Facebook. The Motley Fool has a disclosure policy.