Snapchat is free and easy to join, the barrier to entry for new entrants is low, and the switching costs to another platform are also low. Moreover, the majority of our users are 18-34 years old. This demographic may be less brand loyal and more likely to follow trends than other demographics. These factors may lead users to switch to another product, which would negatively affect our user retention, growth, and engagement. Snapchat also may not be able to penetrate other demographics in a meaningful manner. For example, users 25 and older visited Snapchat approximately 12 times and spent approximately 20 minutes on Snapchat every day on average in the quarter ended December 31, 2016, while users younger than 25 visited Snapchat over 20 times and spent over 30 minutes on Snapchat every day on average during the same period. Falling user retention, growth, or engagement could make Snapchat less attractive to advertisers and partners, which may seriously harm our business.
One way to avoid this, of course, is to sell only small portions of stock at a time. Lockout periods were designed to prevent such stock dumps early on, but end up just delaying the process. And like OPEC, if there are several shareholders who want to "cash out" of this dog stock, it becomes a classic race to the bottom. They might agree to sell only a dribble at a time, but the one who cheats on this agreement ends up cashing in - while the one who holds true finds the share price has bottomed out, and they can't sell at any price.
The easiest way to avoid this trap is to simply avoid buying hyped IPO stocks - which is to say, all IPO stocks. You are not going to be the next Paul Allen, so just get over it. Maybe 1 in 100 might have been a good buy - the rest were crap. It isn't worth the risk to think you are smart enough to buy the right one.
UPDATE: Some are saying that the dip in Snapchat stock has been caused by some prognosticators who are trash-talking the stock and at the same time, short-selling it. One bank says $15 a share is their "target" price, while Goldman sticks to $27 a share, without explanation. A finance journalist goes online and tuns down the stock, but at the same time, short-sells it.
My perspective? The fundamentals, aren't there and the kids are moving to Facebook's Instagram anyway. But regardless, it is just best, I think, as a small investor, to "sit out" these manipulated overpriced and overhyped stocks in money-losing companies.
You don't have to invest in every damn thing. Particularly when it gets a lot of attention in the press!