Here's Why Snap's Stock Fell 31% in January
Shares of Snap (NASDAQ: SNAP) dropped 30.8% in January, according to data from S&P Global Market Intelligence. Snap made some news in the month regarding some legal matters and content deals. Some negative analyst commentary about the competitive impact of TikTok also crept into the narrative. However, none of that was meaningful enough to explain a 31% change in the company's value, so the losses have to be attributed to market forces. The tech sector and growth stocks are getting slammed by ongoing rotation toward value stocks and lower-risk asset classes.
Image source: Getty Images.
During the pandemic bull market, Snap charged to a price-to-sales ratio above 40 and forward price-to-earnings (P/E) ratio above 200. Those are both high relative to the market in general, and the stock was also expensive relative to its own historical levels. It exited January with a more modest 12.5 price-to-sales and 66 forward P/E ratio.
Source Fool.com
