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article imageSnap shrugs off growth concerns as stock rebounds from record low

By James Walker     Aug 15, 2017 in Technology
Snap might be on course to recover its position on the stock market. Employees can now trade their stock as the lockup period is over. Although analysts had thought this could cause a rush of selling, the price is up and Snap has started the week strong.
Shares in the social media company fell beneath $15 last month amid concerns about the impending employee lockup expiration and Snapchat's failure to fend off Facebook. Snap's employees can now trade their own shares on the market, providing some more fluidity and an increase in trading activity.
Recode reports over 84 million shares were traded yesterday when the lockup period expired. Analysts had thought the flurry of activity could send Snap's share price spiralling even further down. Despite yesterday being the fourth biggest trading day since Snap's IPO, the company instead held its ground and made some significant gains.
READ MORE: Snap shares fall below $15 after underwriters downgrade stock
The consensus now is that the stock has reached the bottom. Snap didn't fall any further because neither its investors nor its employees wanted to actually cash out their shares. The company will now be allowed time to recover again before the selling activity returns in full force. Nobody wants to sell their stock while the price is the lowest it's ever been.
The stock was up 6 percent on Monday, putting Snap on course to start reversing some of its July losses. The company's disappointing second-quarter earnings call led its underwriters to significantly downgrade their price targets.
Snap's problems are headed by its ongoing advertising troubles and its recent growth stall. The latter has been widely attributed to Facebook's rapid expansion of rival features. The company also has an established and successful ad network that's more attractive to advertisers than Snapchat's fledgling alternative. Snap still lacks an automated ad bidding system, regarded as a necessity for a major ad platform but now delayed until later this year.
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While Snap isn't without its long-term issues, investors are now approaching the company more optimistically again. Business Insider reports analysts Cantor Fitzgerald believes the end of the lockup period will be beneficial for the company. With the anticipated negative impact avoided and now "behind the company," Snap can start to stabilise its stock price and solve its bigger challenges.
The company's user growth and advertising are still standout areas to address. Beneath the negative reports, Snap's second quarter earnings also revealed strong user engagement and daily visitor rates though. These have given investors something to be pleased about, indicating that people who are using Snapchat are showing no signs of leaving.
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