Investing.com – Snap shares traded lower on Monday, after a slew of analysts slapped a “sell” rating on the social media company’s stock.
Shares of Snap Inc (NYSE:SNAP), which closed nearly 60% above its IPO price of $17.00 last Friday, slumped more than 7% intraday, as Wall Street analysts’ initiated coverage on Snap with a rating of “sell” and warned that Snap shares are overvalued.
According to Factset, the average recommendation from analysts’ covering snap is “underweight”, and the company has yet to receive a “buy” rating from any analyst – five out of the seven analysts rated the stock as a “sell”.
The lack of conviction among Wall Street analysts to issue a “buy” rating on Snap, followed a warning from Biran Wieset, an analyst at Pivotal Research Group, who on March 2, placed a price target of $10 on the stock.
"Investors in Snap will be exposed to an upstart facing aggressive competition from much larger companies, with a core user base that is not growing by much and which is only relatively elusive," Wieser said in a note on March 2.
Snap’s poor start to the week, added to concerns that the social media company may struggle to profit from its popularity, as it posted $515 billion loss in 2016.
"For the year ended December 31, 2016, we incurred a net loss of $514.6 million, as compared to a net loss of $372.9 million for the year ended December 31, 2015," snap’s IPO filing read.
Snap shares last traded at $25.13, down 7.25%.