Without a doubt Snapchat stock (SNAP) was the first individual stock purchase for many millennial and novice stock investors. The stock’s popularity was seen after it opened for trading at a whopping $24 after being priced at $17. That means that if you bought SNAP stock anytime the first two days, you bought it at a price of $24 or higher. And now, one week later, you are under water as the stock has fallen back under that opening price.
So, now what?
I thought I’d link to a few articles that might give you more clarity of what just happened and what might happen with Snapchat going forward:
- Its important to always be gaining knowledge about the stock market and how things work. No matter whether SNAP goes up or down from here, it is important to learn about valuations, time horizons, risk, diversification, and many other things.
- Undeniably, Facebook is one of Snapchat’s biggest rivals and problems. I know a lot of SNAP investors are hoping that the company can someday compete with Facebook and that is why they bought the stock. But here are all the ways Facebook has copied Snapchat and with FB’s huge user base, that can’t be a good thing.
- It is very common for IPO stocks to drop in value after a couple days or weeks of trading. This is because the hype and high demand (which was the case for Snapchat) can push the price up to levels that are artificially created. I always think its best to wait a while to buy a new IPO stock so that things can settle down a bit.
- It is clear that SNAP’s stock price is so high that everything must go perfectly for that value to be justified. There is a case that the Snapchat IPO was the most inflated ever.
- Here’s a quick look at what went right and wrong with the SNAP IPO. There were no hiccups on the first day of trading but the problems for the company may come later on.
If Snapchat was your first stock purchase, it important that you make an effort to better understand what you just bought. You will have to figure out how long you want to hold the stock and this may vary depending on your risk tolerance, especially if the stock goes down. When you buy any stock, you can lose money and getting used to that feeling is something that some people adjust to better than others.
SNAP should not be your only stock purchase….you should follow it up with putting more money into the market by buying more individual stocks or ETF’s that mirror the market. You should try to diversify so that you own more than just SNAP. And always remember to only use money that you don’t think you will need for 1 to 5 years because if you suddenly need money and your stock(s) are down, you will be forced to sell and take a loss.