Snap Inc. (SNAP), the maker of the disappearing-message app Snapchat, has been trading dangerously close to its initial public offering price as concerns about its ability to attract advertisers weighs on its prospects. But things may get even worse in the next few weeks as the lockup period expires on shares with MKM Partners predicting the stock could fall beneath the $17 a share price it went public at.

Beginning July 31, investors who were allotted shares in the IPO can start unloading them in the market. There are some 1.2 billion shares that will come out of lockup, which JPMorgan recently estimated accounts for 84% of the shares outstanding. Insiders at the app company have been prevented from selling the stock given to them in the IPO until late July or early August. Once that restriction is lifted, many are bracing for a steep decline in the value of its shares. (See also: Snap Shares Getting Closer to Post-IPO Low,)

Short Interest Up

Taking the performance of other social media stocks—Facebook Inc. (FB), Twitter Inc. (TWTR) and LinkedIn—MKM Partners managing director Rob Sanderson said each of the stocks fell on average 24% in the month before the lockup expirations with losses usually picking up in the week ahead of the expiration date. The analyst noted in a research report covered by CNBC that Facebook, Twitter and LinkedIn declined on average 14%. The Nasdaq​, which is heavily laden with technology stocks, rose an average 1.1% during the same time frame, according to the analyst. (See also: How Snapchat Makes Money.)

Sanderson isn’t the only one that is predicting Snap shares can fall even more. Traders have been betting the stock will go lower resulting in an increase in short interest. S3 Partners, the financial analytics firm, reported short interest in shares of Snap peaked at the end of May and has been declining since then. Still, Ihor Dusaniwsky of S3 Partners thinks short interest will increase if the stock remains around its IPO price as lockups for insiders shares expire, which will release more supply into the market as some investors look to exit their position. This will bring the average borrowing cost down, attracting more short selling interest. "Short sellers have been paying expensive borrow rates since the middle of May and now they have a $195 million cushion to make the 46 day wait until the first lockup expiry more comfortable," Dusaniwsky said.

Snap closed the trading session Monday at $17.29, down 1.43% or $0.25 a share.

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