Snap Inc. (SNAP), the parent company of social network, Snapchat, was off to a brilliant start on its debut. The company’s IPO was multiple times oversubscribed and shares soared 44% on the first day of trading. However, shares fell nearly 10% yesterday amid reports that the company has come under fire from several institutional investors.

Snap Lands into Trouble with Institutional Investors

Investors aren’t happy with the company’s offering of 200 million Class A shares that carry no voting rights. Per a Business Insider report, they have “approached” stock index providers such as S&P Dow Jones Indices and MSCI Inc to prevent Snap and other such companies that offer shares without voting rights from getting incorporated into these benchmark indexes. The meeting is scheduled sometime this week.

Investors argue that the absence of voting rights completely bars a shareholder from speaking on issues like a company’s growth plans or compensation shelled out to executives. Business Insider also adds that if such a company is listed on any of the indices, “then managers of stock index portfolios will have to buy its shares and other investors, whose performance is tracked against such indexes, would likely follow suit.”

The absence of voting rights implies that the company does not intend to dilute its decision making power. Snap will have a three-tier share structure and founders Evan Spiegel and Bobby Murphy will have maximum voting rights through the ownership of Class C shares, which carry 10 votes per share. The Class B shares carry one vote per share. Such form of corporate governance might prove detrimental for investors, especially when there is uncertainty about its future.

What’s Concerning Investors?

Snap Inc has been shunned by many Wall Street analysts for various reasons. Citing instances of Twitter Inc. (TWTR – Free Report), Groupon Inc and many others, analysts believe that Snap “will follow a pattern of hot, then cooling, tech IPOs.”