Shares in Snap, the social media phenomenon that last week became the darling of the New York Stock Exchange, tumbled further at the open of US markets on Tuesday, falling a further 10 per cent to a fresh low of $21.30.
Stock in the star tech company fell back down to earth yesterday, wiping nearly $4bn off the company’s market cap.
A blockbuster float last Thursday saw the firm’s stock jump 40 per cent, with further gains on Friday. Traders returned from the weekend with a more sceptical view, however, sending shares down 12 per cent.
Coverage initiated by Needham slapped the Snapchat owner with an underperform rating, saying shareholders “don’t benefit from the upside of Snap’s genius because competitors can roll out Snap’s best ideas to larger user bases virtually overnight”.
Meanwhile, last night a group representing large institutional investors approached index providers S&P Dow Jones Indices and MSCI, looking to bar Snap and any other company that sells investors non-voting shares from their stock benchmarks.
Both index providers have said they are reviewing Snap’s inclusion, Reuters reported.
Were Snap to be added to indexes such as the S&P 500 Index or the MSCI USA Index, managers of stock index portfolios would have to buy its shares, and other investors whose performance is tracked against such indexes would likely follow suit.
Some money managers worry about buying Snap’s Class A shares because they have no voting rights, meaning those shareholders will have no voice on matters like strategy or executive pay.