The Morning Brief: Snap’s Stock Crackles and Drops

May 11, 2017   Stephen Taub

The app maker issued disappointing results, to the chagrin of its hedge fund investors.

Hedge funds and other investors will no doubt be sharply focused on Snap’s stock Thursday after the photo-messaging application provider reported disappointing results when it delivered its first earnings reports after the market closed Wednesday. Shares of Snap plunged about 25 percent in after-hours trading after revenues came in below estimates while user growth was slower than analysts were looking for. Its net loss also expanded to $2.2 billion, in part due to hefty compensation deals.

We won’t know for another few days who held the stock as of the end of the first quarter. However, as we earlier reported, several hedge funds made sizable bets on the company when it was private. They include Glade Brook Capital Partners, Lone Pine Capital, Coatue Management, and York Capital Management.

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Shares of hedge fund favorite Allergan fell 3.7 percent, to $229.72, after Goldman Sachs downgraded the shares of the drug giant to neutral from buy and set a $262 price target, asserting it lacks a short-term catalyst, according to reports. On Tuesday the company reported mixed results; the stock closed down that day after initially rising. At the end of 2016 Allergan was the thirteenth most popular hedge fund stock. It will be interesting to see the ownership positions after hedge funds file their first quarter U.S. stock holdings, due by Monday.

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Credit Suisse trimmed its price target on hedge fund favorite Priceline Group from $2,050 to $2,020 but kept its outperform rating on the stock after the internet travel agency reported first quarter results.

"Given a favorable demand environment with healthy macro trends and no significant changes to the competitive landscape, we remain constructive on Priceline given low market share, track record of execution and undemanding valuation given expected 25 percent unit growth in 2017," the bank tells clients in a note. The stock closed down 4.5 percent on Wednesday, at $1,824.77.

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Shares of Valeant Pharmaceuticals International jumped another 5.2 percent, to $12.68, one day after the company reported a volume of asset sales and debt reduction that apparently met investor approval. Over the past two days the stock has gained more than 30 percent. Even so, it is still down nearly 13 percent for the calendar year.


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