That Didn't Take Long: Snap Initiated With A Sell Rating At Pivotal
Pivotal Research Group's Brian Wieser initiated coverage of Snap with a Sell rating and $10 price target, notably below the $17 per share offering price and well below the $25 per share Snap was trading at early Thursday afternoon.
Speaking to CNBC, Wieser said the valuation on Snap's stock is "more than robust" especially given his revenue estimate of just $7 billion by 2023. The analyst suggested Thursday's strong performance is in part due to IPO euphoria and the thinking that "the next person will pay more for it."
Wieser also attributed his bearish rating to the fact that Snap issues a large amount of shares. For example, the average Snap employee received last year $1.4 million worth of shares last year which is "stunning."
Wieser also argued Snap's corporate structure is "sub-optimal" and led by a management team that lacks the necessary experience in transforming a new product into a successful company.
"It's not to say that they can't be successful," Wieser explained. "But they haven't done it yet so there is some real risk. I could generate one billion dollars in revenue if you gave me $2 billion today. That wouldn't make me successful."
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