Middle-to-small start-ups fuel worries about overheated IPOs

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Snap Inc and Blue Apron Holdings Inc's released a dismal quarterly report on Thursday, shows a decline in its share price, which is failed to achieve the sky-high expectations set ahead of their initial public offerings.

Along with those giant technology companies, like Google, Facebook Inc, Apple Inc and Amazon.com Inc are beginning to squeeze the life out of the startup economy, there has more challengers for those middle-to-small companies, including Snap and Twitter Inc, are struggling to maintain growth.

According to Reuters, the owner of Snapchat dropped 17% in extended trade after its second quarterly report as a publicly listed company missed Wall Street's estimates and added to fears the social media company is succumbing to competition from Facebook.

A woman stands in front of the logo of Snap Inc. on the floor of the New York Stock Exchange (NYSE) while waiting for Snap Inc. to post their IPO, in New York City, New York, U.S. on March 2, 2017. /Reuters Photo

Blue Apron, early this year lost nearly a fifth of its value after the meal-kit delivery company's first quarterly results following its June IPO also missed estimates and compounded worries that Amazon.com will eat its lunch.

Although there has concerns about slowing user growth and a warning by the company that it might never become profitable, 3.4 billion US dollar IPO inputs by Snap is still the largest US technology company investment in last three years.

Amazon.com Inc registered a trademark for a similar meal-kit service last month, heralding even more competition to come for Blue Apron, which already competes with dozens of startups. That move, along with Amazon's industry-altering deal to buy upscale grocer Whole Foods Market Inc, has weighed on Blue Apron's shares since their market debut.

The Blue Apron logo is pictured ahead of the company's IPO on the New York Stock Exchange in New York, U.S., June 29, 2017. /Reuters Photo

"You have large players like Amazon, Google, Facebook and others with big pockets that can say 'This is a space we want to own,'", said Philippe Collard, founder of Yabusame Partners, a management consulting firm specializing in the technology industry. "I would not be surprised to see further attempts to go public be much more cautious."

Other young technology companies also failed to live up to Wall Street's hype in recent years. Fitbit Inc surged to over 50 US dollar from the 20 US dollar price set in its 2015 IPO, but has since sunk to under 6 US dollar.

An analysis by Reuters in February showed that globally, shares of most of the 25 largest technology IPOs have languished in their first 12 months on the public market. According to a Reuters analysis of market performance, 16 of them had a big decline from their debut day closing price.

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