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As Bad As Snap's Post-IPO Run Is, Facebook's Was Much Worse

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As Bad As Snap's Post-IPO Run Is, Facebook's Was Much Worse
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Investors are quick to rightfully point out that Snap Inc (NYSE: SNAP)'s stock performance has a public company has been a bust. With shares trading nearly $2 lower than its initial offering price of $17, many may be tempted to throw in the towel.

But before losing complete faith in Snap's stock, investors should be reminded that its rival Facebook Inc (NASDAQ: FB) had a worse performance in its first few months, Recode stated. Specifically, Snap's stock is down around 35 percent since day one while Facebook's stock lost more than 50 percent in its first year.

Facebook's stock hit an all-time low of $17.55 after opening for trading at $42.05 and many investors were still hesitant to initiate a position near its all-time lows. This isn't to say that history will repeat itself and Snap's stock will multiply nine-fold since "Snap's biggest problem is, well, Facebook," Recode noted.

Snap's Snapchat social media app is getting crushed by Facebook's Instagram, at least according to CNBC's Jim Cramer. Facebook is even offering companies that advertise on Snapchat's platform free space on Instagram in a relentless bid to crush Snap.

Nevertheless, at the end of the day Snap is still a young company — much like Facebook was when it went public. Perhaps investors should give Snap's management team more time to execute, especially at a time when advertisers are at the very least willing to test the waters and advertise on the platform.

Bottom line, Snap is, in essence, an advertising platform and needs consistent scale and growth to live up to Wall Street's expectations. Facebook has already delivered on that but Snap is still hoping to.

Related Links:

Cramer's Bearish Case On Snap Fades Ahead Of Lock-Up Expiration

Recent Downside In Snap Shares May Be An Overreaction; Stifle Upgrades To Buy

Posted-In: Facebook IPO ReCode Snap IPOIPOs Tech Media Trading Ideas General Best of Benzinga

 

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