Blue Apron Holdings Inc and Snap Inc’s quarterly dismissal reports show a significant decline in their shares, making them join the long list of tech firms that have failed to meet expectations that followed their initial offerings to the public.
Silicon Valley is beginning to worry about startup economy and the dominance of Facebook Inc, Alphabet Inc’s Google, Amazon.com Inc and Apple Inc. Also, big would-be competitors like Twitter and Snap Inc are battling to keep up with their growth.
The owner of Snapchat, Snap declined 17 percent in additional trade at the end of the second quarter and missed the estimates by Wall Street. This arose the fears that Snapchat is bowing to the intense competition from Facebook.
Before Snap’s decline, Blue Apron lost about a fifth of its worth following the firm’s results of the first quarter. The meal-kit delivery company didn’t meet the estimates, creating worries that Amazon.com will subdue it.
Snap made it to the top five months ago
Regardless of the fears of decreasing number of users and speculations that the firm may not be profitable, the spot Snap hit five months ago – $3.4 billion IPO was the highest ever attained by a U.S. tech company in three years. Facebook’s Instagram launched features that copy the trendy characteristics from Snap.
Blue Apron faces more competition
Amazon.com Inc enrolled a trademark for a possible meal-kit delivery service last month, meaning there’s more competition in the way for Blue Apron which is already into competition with other start-ups. This movement merged with Amazon’s proposed deal to buy Whole Foods Market Inc has dealt a lot on Blue Apron’s shares since their start up.
According to the founder of Yabusame Partners, Philippe Collard, large players in the game like Facebook, Google and a=Amazon exist, and they can decide to own the space they need with their big pockets. He suggested a possible scenario where these firms move to acquire more grounds in the market. Yabusame Partners is a management consulting firm that specializes in the tech industry.
Other upcoming technology firms that didn’t meet the Wall Street expectations include Fitbit Inc. However, financing of young start-ups have dropped significantly, following the fears by early stage investors about valuations.
Reuters analyzed in February that the shares of many of the 25 newest technology IPO didn’t do well in their first year in the market. !6 of them recorded reduction from their first-day closing price.