If you had been wondering whether you should buy or sell snapchat shares then you might have found yourself confused not only by the direct information which you absorbed from the financial media outlets but also by the distinctly negative tone that was being taken by analysts, pickers and other commentators on the probable future performance of shares in the company. You might indeed, with some justification, have wondered what had brought about all this negativity considering all the excitement and hoopla that had surrounded the recent IPO of the concern. At the time you would have read and heard that snapchat shares were the ‘next big thing’ and would have been confused by the distinctly mournful tone being taken by aforementioned analysts, all of whom were, at the time, listing shares in the company as either ‘hold’ or more often ’sell’. If you had been one who took advantage of the IPO or the subsequent activity then you might well have taken this advice.
The fact was that Snap Inc., and by extension, snapchat faced significant challenges at that time, all of which were affecting the performance of snapchat shares. The first factor and perhaps the most significant was the nature of snapchat itself; to put it simply it offered no profits. Snap Inc was seeking to amend this through the use of advertising but this was a relatively recent development in early 2017 and predictions for what would transpire in the future varied, with some predicting that the company would not start to show a profit until as late as 2020. Another concern also impacting on the performance of snapchat shares was the slowing in the growth of customer numbers in the last quarter of the year 2016. Indeed the rate of growth over that period was the slowest the company had known for three years.
Snap Inc explained away this slowing of growth by referring to technical matters concerning problems with Android which had, perhaps appropriately, slowed the performance of the app itself, thus disappointing existing customers and perhaps putting off some of those who might have been thinking about using snapchat. This was certainly unfortunate but and it had its effect on the performance of snapchat shares. It was also combined with another, a rather more ominous factor which causing the analysts to be very guarded in their predictions about the future performance of snapchat shares, and that was the presence of very formidable opposition indeed to the popular photo-sharing app. This came in the form of Facebook’s Instagram, which had Facebook’s vast customer base behind it. Many pessimistic commentators predicted that Facebook’s Instagram would eventually eat up snapchat’s customer base. It was not all negativity in this area as other commentators pointed toward Snap Inc.’s proven track record of innovation. |This was, of course, a matter of the greatest concern and the question of whether snapchat could keep up with or even outperform its vast rival was one which was bound to have an effect on the share price.
Spread betting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment.