Millennial love for Snapchat extends to the stock
|A woman stands in front of the logo of Snap Inc. on the floor of the New York Stock Exchange (NYSE) while waiting for Snap Inc. to post their IPO, in New York City, NY, U.S. March 2, 2017. REUTERS/Lucas Jackson
The stock of Snapchat's parent company has been on a roller-coaster ride since its market debut last week, surging more than 70 percent from the initial public offering price in the first two days of trading and plunging back down by a quarter since.
Some seasoned investors have been wary of the volatile, relatively high-priced stock of a company that has yet to report a profit. But novice investors said their deep affinity with the disappearing-message app prompted them to jump in.
"I bought it even when I was pretty positive I would not make a profit in the short run, but just because I am a fan of the product," said Chris Roh, a 25-year-old software engineer in San Francisco, who has only been trading stocks for about a month on Robinhood, a mobile trading app popular among millennials.
Snap sold shares at $17 a piece in its IPO on March 1. The day after, on the first day of trading on the New York Stock Exchange, the stock popped as high as $26.05.
Roh said he bought the stock on that first trading day at $25 a share.
Trading activity on Robinhood jumped by 50 percent on the day of Snap's debut, with more than 40 percent of those who traded that day buying Snap shares. The median age of Snap shareholders on the platform were 26, the same age as Snap Chief Executive Evan Spiegel, according to Robinhood.
Snap's surge extended into the second day of trading, March 3, when its stock went as high as $29.44. It has sunk 25 percent since, closing on Friday at $22.07.
Kaleana Markley, a 29-year-old human resources consultant in San Francisco, bought Snap shares as her first stock market investment.
"Snap just felt like the IPO of my time and seeing where Facebook and Amazon are now, I really think Snap has the potential to grow (like them)," said Markley, who bought the shares through Stockpile, another online brokerage aimed at millennials, generally defined as people reaching young adulthood in the early part of this century.
|Traders gather at the post where Snap Inc. is traded on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 6, 2017. REUTERS/Brendan McDermid
Markley said she bought some shares in Snap on the first day of trading and some more on the second day, when the stock hit the highest level of its short lifetime.
"There are a lot of companies I don't know or recognize, but Snap, I use the product, and know everyone - my friends, my co-workers, even my parents - uses it."
Although some more experienced investors have avoided loss-making Snap, millennials were not alone in their hunger for shares of the company, which now has a market value of more than $25 billion.
Many sophisticated institutional money managers were also intent on getting a piece of the hottest tech IPO in years, despite concerns about the company's slowing user growth and lack of voting rights for new shareholders.
Snap declined to comment on trading in its shares.