Millennial love for Snapchat extends to the stock

NEW YORK: For some millennial investors, loyalty to one of their favourite apps matters more than financial details in the case of Snap Inc.

The stock of Snapchat’s parent company has been on a rollercoaster ride since its market debut last week, surging more than 70 per cent 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 a pp 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 25year- 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 US$ 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 US$26.05.

Roh said he bought the stock on that first trading day at US$25 a share.

Trading activity on Robinhood jumped by 50 per cent on the day of Snap’s debut, with more than 40 per cent 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 US$29.44. It has sunk 25 per cent since, closing on Friday at US$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.

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 US$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. — Reuters