Snap's Brain Drain Continues With Chief Strategy Officer's Exit

Yet another high-level executive at Snap Inc SNAP has announced their departure, and investors are once again left to wonder whether the revolving door is more a sign of management losing faith in the company or a sign the company is headed in a much-needed new direction.

Another One Bites The Dust

Snap announced in a Monday SEC filing that Chief Strategy Officer Imran Khan is stepping down. Snap stock traded lower by 1.7 percent on Monday morning following the news and is now down 33.3 percent year-to-date — and trading within pennies of its all-time low.

Khan is the latest in a series of high-profile Snap departures in the past year, a list that also includes CFO Drew Vollero, head of product Tom Conrad, Snapchat Spectacles lead Mark Randall, head of sales Jeff Lucas and VP of engineering Tim Sehn.

Snap has struggled to gain market traction following its 2017 IPO, and even after a steep decline in share price, analysts are cautious about the outlook for Snap given the highly competitive social media landscape.

In the company’s last earnings report in August, Snap disclosed that it lost 3 million users during the quarter.

In the new filing, Snap said Khan informed the company he is leaving to pursue other opportunities.

“Mr. Khan has confirmed that this transition is not related to any disagreement with us on any matter relating to our accounting, strategy, management, operations, policies or practices (financial or otherwise),” the company said.

How Low Can Snap Go?

CFRA analyst Scott Kessler recently said the executive changes are just one of several headwinds for Snap at the moment.

“We acknowledge a number of significant risks for the company/stock, including competition (and we note that Facebook's Instagram has performed very well, in our opinion) and execution (with issues related to the Snapchat redesign and executive changes, for example),” Kessler said. (See his track record here.) 

After a major sell-off this year, additional downside in the stock is likely limited in the near-term, the analyst said. 

“After a substantial decline in the stock, which closed last year at $14.61 (down by nearly a third in 2018), we anticipate that SNAP will perform in-line with the broader market over the next 12 months,” Kessler said.

CFRA has a Hold rating and $10 price target for Snap stock.

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Posted In: CFRA ResearchCitron ResearchScott KesslerAnalyst ColorNewsShort SellersPrice TargetManagementAnalyst Ratings

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