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Giving up the ghost: investors bail on Snap

(Reuters) - Here one minute, gone the next.

While that is the premise of Snap Inc’s popular messaging platform, investors also saw any gains from its red-hot IPO disappear when shares plunged far below their initial sale price on Tuesday.

Morgan Stanley, a lead underwriter on the company's initial public offering, slapped a price target of $16 on the stock - a buck below its March IPO price. Analyst Brian Nowak wrote in the note that "we have been wrong about Snap's ability to innovate and improve its ad product this year."

Snap shares got slammed, slumping nearly 9 percent in heavy trading volume to close at $15.47. It was a 47 percent bump down from the $29.44 intraday high they hit the day after the IPO.

“There’s a lot of people betting that this stock is going down and I think this analyst is just adding fuel to the fire,” King Lip, chief investment officer at Baker Avenue Asset Management in San Francisco, said of Morgan Stanley's downgrade.

The bank cut its rating to "equal-weight" from "outperform" and slashed its price target to $16 from $28, below the median target of $19.50.

The ratings move was a rarity by a lead underwriter so soon after a listing. Goldman Sachs, another lead underwriter, still has a "buy" rating on the stock and an unchanged $27 price target.

"We...


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