Snap shares have plunged 63% since Kylie Jenner tweeted her displeasure about the Snapchat app's redesign.
- Snap shares fell more than 7% Tuesday and have plunged about 63% since Kylie Jenner tweeted her displeasure with the Snapchat app's redesign.
- The stock's plunged has wiped out more than $13 billion from the company's market capitalization.
- Short sellers have made more than $1 billion betting on the stock's slide.
- Watch Snap trade in real time here.
Snap shares slide about 7% Tuesday after an analyst said the company was "quickly running out of money" and that he thinks a capital raise needs to take place in the middle to end of 2019.
Tuesday's weakness pushed shares to a record low of $6.92. They have cratered a whopping 63% - from about $18.50 a share - since Kylie Jenner's infamous tweet blasting the Snapchat app's redesign, wiping away more than $13 billion of market cap in the process.
"Sooo does anyone else not open Snapchat anymore?" Jenner asked her Twitter followers back on February 22, following the app's controversial redesign. "Or is it just me... ugh this is so sad."
She followed up with another tweet: "Still love you tho snap ... my first love."
Immediately following the tweet, Snap's stock dropped more than 7%. And since then, "demand by bearish speculators to short Snap has been steadily rising," according to Matthew Unterman, director at the financial-analytics firm S3 Partners.
Through Tuesday, those traders who had shorted shares immediately following Jenner's tweet had mark-to-market profits of $1.046 billion, yielding a return of 76%, according S3 data.
After stabilizing between $12 and $14 a share in June and July, shares came under pressure following the company's second-quarter earnings release on August 7. Those results showed that while top and bottom line performance was better than expected, the company suffered its first-ever decline in sequential daily active users. The decline in user trend "was primarily driven by a slightly lower frequency of use among our user base due to the disruption caused by our redesign," CEO Evan Spiegel said on the call with analysts after the earnings report. Shares plunged 6.7% following the results and have never recovered.
And last Week, Spiegel sent out an internal memo running over 6,500 words long, admitting the company moved too fast in 2018 - specifically referring to the controversial Snapchat redesign. He said the company will refocus on the core principle of being the "fastest way to communicate" and reach profitability in 2019.
But analysts are still worried.
Evercore ISI's Anthony DiClemente recently said he thinks the headwinds from user trends could continue in the third quarter. He slashed his price target to $7 from $9.
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