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Snap Shares Inc. rose by almost 5 percent as IPO underwriters began coverage of the Snapchat owner with a much needed “buy” rating.
Snap's IPO, the biggest of its kind in trading started on a strong footing but experienced volatile trading since its debut, with majority of investors skeptical of its declining user growth. The company has also flagged that it may never offer tangible returns.
Analysts who have no connection to the listing in recent weeks began giving the stock a neutral or negative rating, making Snap one of the worst rated stocks on Wall Street.
But the firm received a lift on Monday after a minimum of eight banks related to Snap's IPO gave the stock positive recommendations. These IPO underwriters include Morgan Stanley and Goldman Sachs.
Brian Nowak, a Morgan Stanley analyst, awarded Snap with an “overweight” recommendation and a price target of $28. Analyst Doug Anmuth of JP Morgan, also one of Snap's underwriters, gave Snap a neutral rating.
The positive rating caused its stock to jump 4.79 percent, closing at $28.83. The latest closing price left Snap's stock up 37 percent from its IPO price of $17, but still down $3 from its peak level that was hit during the second day of its trading.
