Millennial love for
Snapchat extends to the stock
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[March 13, 2017]
By Angela Moon
YORK (Reuters) - For some millennial investors, loyalty to one of their
favorite apps matters more than financial details in the case of Snap
The stock of Snapchat's parent company has been on a roller-coaster ride
since its market debut last week, surging more than 70 percent from the
initial public offering price in the first two days of trading and
plunging back down by a quarter since.
Some seasoned investors have been wary of the volatile, relatively
high-priced stock of a company that has yet to report a profit. But
novice investors said their deep affinity with the disappearing-message
app prompted them to jump in.
"I bought it even when I was pretty positive I would not make a profit
in the short run, but just because I am a fan of the product," said
Chris Roh, a 25-year-old software engineer in San Francisco, who has
only been trading stocks for about a month on Robinhood, a mobile
trading app popular among millennials.
Snap sold shares at $17 a piece in its IPO on March 1. The day after, on
the first day of trading on the New York Stock Exchange, the stock
popped as high as $26.05.
Roh said he bought the stock on that first trading day at $25 a share.
Trading activity on Robinhood jumped by 50 percent on the day of Snap's
debut, with more than 40 percent of those who traded that day buying
Snap shares. The median age of Snap shareholders on the platform were
26, the same age as Snap Chief Executive Evan Spiegel, according to
Snap's surge extended into the second day of trading, March 3, when its
stock went as high as $29.44. It has sunk 25 percent since, closing on
Friday at $22.07.
Kaleana Markley, a 29-year-old human resources consultant in San
Francisco, bought Snap shares as her first stock market investment.
"Snap just felt like the IPO of my time and seeing where Facebook and
Amazon are now, I really think Snap has the potential to grow (like
them)," said Markley, who bought the shares through Stockpile, another
online brokerage aimed at millennials, generally defined as people
reaching young adulthood in the early part of this century.
Markley said she bought some shares in Snap on the first day of trading
and some more on the second day, when the stock hit the highest level of
its short lifetime.
"There are a lot of companies I don't know or recognize, but Snap, I use
the product, and know everyone - my friends, my co-workers, even my
parents - uses it."
Although some more experienced investors have avoided loss-making Snap,
millennials were not alone in their hunger for shares of the company,
which now has a market value of more than $25 billion.
Many sophisticated institutional money managers were also intent on
getting a piece of the hottest tech IPO in years, despite concerns about
the company's slowing user growth and lack of voting rights for new
Snap declined to comment on trading in its shares.
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A woman stands in front of the logo of Snap Inc. on the floor of the
New York Stock Exchange (NYSE) while waiting for Snap Inc. to post
their IPO, in New York City, NY, U.S. March 2, 2017. REUTERS/Lucas
Companies with especially enthusiastic customer bases, such as action-camera
maker GoPro Inc, social games company Zynga Inc and English soccer club
Manchester United Plc, have in the past attracted fans to dabble in their IPOs.
the wildly popular Snapchat - with an average of about 158 million daily active
users - appears to be taking the enthusiasm to another level, some analysts and
"One of the non-fundamental reasons driving the stock is that many millennials
purchased Snap shares at inflated levels due to their preference for the
product," said Shebly Seyrafi, managing director at FBN Securities. "That is,
not due to a real understanding of the number or valuation."
Snapchat's users, mostly in the 18-34 age range coveted by advertisers, spend an
average of 25 to 30 minutes on the app and visit it more than 18 times a day,
according to the company, making it more visited than any other social media
"Snap is tapping into the pride of ownership (for millennials) which we don't
see often in the stock market," said Dan Schatt, chief commercial officer at
IPO gave Stockpile its biggest single day since it launched in 2015, nearly 10
times the service's daily average in transaction and sales.
"Snap is offering the comfort of buying something that you know so well,
understand and use it every day, which is what these young investors want," said
Schatt, whose teenaged daughter and son also bought Snap shares with his
approval on Stockpile.
On StockTwits, a Twitter-like platform for sharing trading ideas, where 40
percent of users are between the ages of 18 and 34, Snap has been the most
talked-about stock for days.
There are concerns about slowing user growth and competition from Facebook Inc <FB.O>.
The overall sentiment on the stock is now 44 percent bullish and 56 percent
bearish, compared to early February when bullish sentiment was 100 percent,
according to StockTwits.
That has not deterred Tiffany Dun, a San Francisco-based mortgage consultant in
her late 20s who purchased 125 shares in Snap on the first day of trading at
about $22 a share.
"There's always risk to everything," she said. "I use the product and I like it,
so I bought some."
(Reporting by Angela Moon; Editing by Jonathan Weber and Bill Rigby)
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