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Snap Stock Tumbles as Investors Expect Selloff Once Insiders Are Free to Sell Shares

Variety logo Variety 6/8/2017 Todd Spangler
© Provided by Variety

Shares of Snap, Snapchat’s parent company, fell more than 6% Thursday after the stock officially became the most-shorted technology IPO so far this year.

Short sellers — who essentially place bets that the price of a stock will fall in the future — now own as much as 28% of the shares available to be publicly traded, Bloomberg reported Thursday, citing data from Markit Group.

The decline comes after Snap shares declined 4% Wednesday, following a report by Nomura Instinet analysts finding that Snapchat app downloads declined 22% during April and May of this year compared with the same period in 2016.

The high short-selling activity in Snap’s stock reflects a broad expectation among certain investors that the company — with a market cap of more than $20 billion — will see the price of its shares fall within the next two months. Snap insiders, including CEO Evan Spiegel and CTO Bobby Murphy, will be free to sell their shares after the post-IPO restriction on their stakes expire July 30.

Spiegel and Murphy, who co-founded Snapchat, own 211 million shares apiece, giving them each 44.4% of shareholder voting power. Those shares are worth around $3.8 billion at the current share price.

In its first post-IPO earnings report, Snap missed Wall Street’s first-quarter expectations and posted a massive $2.2 billion loss.

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