Citi analyst Mark May downgraded Snap Inc SNAP from Buy to Neutral with a $20 price target.
3 Reasons
User growth was disappointing in the first quarter, weakening the company’s monetization and profit leveraging potential in the near term.
A slower rollout of new platforms has slowed monetization growth below the analyst’s second-half 2017 model.
Shares will be pressured by the end of the IPO lock-up, which will increase the stock available for sale by 949 million shares.
Despite near-term doubts, May is still convinced that the company can drive earnings over time.
A Quick Recap: Snap’s First Quarter
Snap went public on March 2 with shares hitting their all-time high on March 3 at $27.09.
The company said on March 4 that it may never reach profitability. It even published a list of 13 reasons why it is a risky investment a few days later.
Snap’s first earnings report as a public company on May 10 was also a disappointment to investors; the company reported a $2.2 billion loss.
Since Snap’s IPO, shares are down 24.59 percent and sit in the low-$18 handle. At time of publication, shares were down 3.72 percent at $18.11.
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