The financial and entrepreneurial tech worlds aren’t often given to folksy platitudes, but when it comes to Fidelity’s adjustment of its stake in Snapchat, the appropriate saying might be “Don’t count your chickens until they’re hatched.”
It seems like Fidelity is doing a bit of recounting now though, as TechCrunch reported that the financial services company has downgraded the value of its stake in the social media platform Snapchat by about 25 percent. The Financial Times first spotted the change; despite listing its shares at $30.72 each in June, the source noted that Fidelity bumped those numbers down to just $22.91 as of the end of September.
While Fidelity has yet to offer an explanation for the downgraded shares, Nigel Morris, chief executive officer of the Americas, Europe, Middle East and Africa at Dentsu Aegis Network, told CNBC that the issue may stem from Snapchat’s ongoing battle to figure out how to become a full-fledged platform instead of a simple messaging service.
“There’s huge potential but as yet there isn’t a proposition that is clearly identifiable,” Morris said. “I think [Snapchat is] not yet in the stage really of defining how they can make brands live on the platform.”
Fidelity’s decisions don’t come in a vacuum. In fact, TechCrunch explained that Blackrock performed much the same downgrade of its shares in Dropbox just a few weeks ago. Silicon Valley venture capitalists have been grumbling about unicorn startups’ runaway valuations for quite some time now, and firms are showing that they’re not afraid to downgrade shares in social media giants like Snapchat. Startups looking to launch should be ready to pitch their ideas to an industry with a much tighter fiscal belt than in years past.
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