Millennials snapping up Snap stock out of love
NEW YORK For some millennial investors, loyalty to one of their favourite apps matters more than financial details in the case of Snap.
The stock of Snapchat's parent company has been on a roller-coaster ride since its market debut last week, surging more than 70 per cent from the initial public offering (IPO) 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 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, just because I am a fan of the product," said Mr Chris Roh, a 25-year-old software engineer in San Francisco.
He has only been trading stocks for about a month on Robinhood, a mobile trading app popular among millennials.
Snap sold shares at US$17 (S$24) 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.
Mr Roh said he bought the stock on the 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 CEO Evan Spiegel, according to Robinhood.
Companies with especially enthusiastic customer bases, such as action-camera maker GoPro and English football club Manchester United, have in the past attracted fans to dabble in their IPOs.
But Snapchat - with an average of about 158 million daily active users - appears to be taking enthusiasm to another level, analysts and brokers said.
"One of the non-fundamental reasons driving the stock is that many millennials purchased Snap shares at inflated levels due to their preference for the product," said Mr Shebly Seyrafi, managing director at FBN Securities.
"That is, not due to a real understanding of the number or valuation."
On StockTwits, a Twitter-like platform for sharing trading ideas where 40 per cent of users are between the ages of 18 and 34, Snap has been the most talked-about stock for days. - REUTERS