Snap shares tumbled after Morgan Stanley, the lead underwriter on the company's initial public offering, downgraded the stock. Fred Katayama reports.
Four months after Snap's public debut, its lead underwriter, Morgan Stanley, downgraded the stock. It dropped immediately. It's rare for a lead underwriter to take such a move so quickly after a listing. It's been on a slippery slope since its initial public offering, tumbling about 45 percent. It slipped below its $17 IPO price for the first time on Monday. GoldBean's Jane Barratt: (SOUNDBITE) JANE BARRATT, FOUNDER & CEO, GOLDBEAN (ENGLISH) SAYING: "I think that people with a very high tolerance for risk could be looking at this as an opportunity, but all the signs right now are that they have been disappointing the Street and the ad market with, yo know, their ability to really capture advertisers." In a note, Morgan Stanley's analyst said user growth has been weaker than expected. He wrote: "We have been wrong about Snap's ability to innovate and improve its ad product this year and user monetization." Snap declined to comment. The company faces stiff competition from Facebook and its subsidiary, Instagram.