Snap priced the IPO above its target range on Wednesday as investors set aside concerns about the company's lack of profits and slowing user growth.
So the initial public offering window may now suddenly be wide open for many so-called unicorns, private companies with a valuation of at least $1 billion.
Snap investors better be more patient than Snapchat users. The company has a market value of $37.8 billion. So the question is: Will Snap be like Facebook, or like Twitter?
With these reservations around Snap, it is no surprise that some pessimists are calling the IPO the top of the current equity boom market and are warning of a re-run of the dot-com bust of 2000. However, after a blistering debut (up 44% on the first day), the stock is now trading below its opening price. You can make a case for Facebook's valuation given its digital marketing market share, profitability, and remarkable growth.
Martin, however, joined a list of analysts who think the stock's price is too high.
Facebook's share price went on to struggle for over a year, before rising above its IPO price.
Twitter, meanwhile, has had a totally different story. This 73% increase was acclaimed as a big success after the disappointing performance of Facebook a year before. But today, amid disappointing revenue and slow customer growth, Twitter trades at $15 a share.
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Another recent IPO, software company Nutanix, plunged 26% Friday following disappointing earnings.
So where is Snapchat's IPO likely to stand between its two forbears?
"They must be a different company a year from now", added Kagan.
It's important to note that it's still early to forecast Snap's market failure, and it's a definite possibility that it could pick up steam again at some point going forward.
"The company needs a well-thought-out acquisition strategy", she said. And as the last couple of quarters have proved, Snapchat's moat isn't very strong with its user growth coming under pressure from aggressive competition from Facebook and its army of products (Whatsapp, Instagram, Messenger). In a regulatory filing, the company touted a user base of 158 million people who send 2.5 billion messages every day. Company's distance from 20 day simple moving average is -7.81% and distance from 50-Day simple moving average is -7.81%.
The reason for the fall was the fact that Wall Street analysts began giving their opinions of the price of Snap shares. A partner at Lightspeed Venture Partners, a local investment firm, he decided that his company would invest $485,000 in Snapchat, which happened to be the first investment Evan Spiegel and Bobby Murphy (Sanpchat's founders) received.