Snapchat (NYSE:SNAP) IPO’d 200 million shares, which were listed at a $7 premium at $24 per share. Many called the stock overvalued.
The stock is valued at 35 times sales, which is twice of what Facebook (NASDAQ:FB) went public at, although Facebook was close to profitability, while Snap isn’t. There was a lot of money to buy the stock and the money came from groups other than technology investors.
Jim Cramer stated: “A declining day following a rampaging bull run is a sign of health, especially when it is associated with a gigantic, yet well-run IPO. It should ultimately bring out more buyers than sellers, and more initial public offerings of companies that had been fearful to tap the markets.
Shares of SNAP currently trade at $27.09, skyrocketing from there IPO. The problem? There aren’t profits. Therefore, let this one fall like Facebook did, then consider buying.