Shares in Snap, the owners of social media app Snapchat, fell 12% to $23.77 during trading on the New York Stock Exchange (NYSE) on Monday, after analysts said the company was overpriced.
After it soared 44% on the day of its initial public offering (IPO), by Monday no analyst was recommending buying the stock, according to data compiled by Bloomberg.
Pivotal Research Group gave the company a 'sell' rating with a price target of $10 a share; far below the $17-a-share IPO and the $24.48 it eventually closed at on the day, according to CNBC. As a result, the stock fell 12% on Monday, having opened trading at $28.17.
Snap's initial success compares with other social media networks' first trading days - Twitter soared 73%, but overall the share price is down 62% since the IPO in November 2013. Facebook's listing was plagued with trading errors and the shares barely gained on its first day, before falling 31% in the first year; however, the stock has risen 260% since the May 2012 listing.
Speaking ahead of Snap's IPO, managers said questions remain over whether it will become the next Facebook or is in danger of following in the footsteps of Twitter.
Snap is yet to record a profit and in 2016, the company's losses widened from $372m in 2015 to $514.6m, echoing the story at Twitter, which recorded a loss of $79m in 2012, the year prior to its IPO.
The group has also offered new investors no promise on profits or a say on how the company will be run, according to the details in its IPO, so it would be difficult to fully predict share price movements, said the managers.
What has been confirmed is that Snap founders Evan Spiegel and Robert Murphy will keep tight control of the company with a three-tiered share structure. They will have ten votes per share, while existing investors will have one vote per share and new investors will not be given a vote.
Marketing agency, Mediakix suggest the similarities between Snap and Twitter are far clearer than those with Facebook.
A note from the company said: "When Facebook filed, it was already a hugely-profitable company that had been around for eight years. It had more than 325 million daily active users and had a staggering expected valuation of $104bn dollars.
"In looking for correlations between some key metrics for three of the largest social tech companies to file for IPOs, we found that Snapchat probably is not going to be the next Facebook, and that it has some work to do if it wants to avoid being the next Twitter."
Walter Price, manager of the Allianz Technology trust, said while Snapchat has already been very successful, particularly with a younger audience, it has a challenge on its hands.
"Going up against Google and Facebook will be hard but Snapchat came up with a new idea. I have kids that use that as much as they use Facebook or even more - they have penetrated that market.
"It will be hard to grow beyond that market but even Facebook are copying a lot of their ideas and taking them into its Instagram product."