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Analysts Turn Bearish On Snapchat, Lower Price Targets On The Stock

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Analysts Turn Bearish On Snapchat, Lower Price Targets On The Stock

Snap Inc (NYSE: SNAP) faces minimal encouraging catalysts in the near-term while user migration towards rival platforms will continue, Evercore ISI said in one of two new bearish reports.

The Analysts

Evercore ISI's Anthony DiClemente maintains an Underperform rating on Snap's stock with a price target lowered from $9 to $7.

Separately, Citi's Mark May maintains a Sell rating on Snap with a price target lowered from $8 to $7.

The Theses

Snap's social media platform Snapchat continues to face intense competition from Facebook, Inc. (NASDAQ: FB)'s Instagram, which can "irreversibly" lower Snap's ability to live up to investor expectations. The research report comes at a time when the platform is showing declining users and a slowdown of revenue growth along with management turnover.

Separately, Citi's May said there are five reasons for a bearish stance to continue moving forward:

  • Near-term concerns including executive departures, poor user trends, operating losses and a concerning third quarter guidance.
  • The Street's 2019 revenue estimates appear to be overly optimistic.
  • The company may need to raise new capital in 2019 or 2020 if revenue growth continues to disappoint.
  • Short interest in the stock continues to rise.
  • The stock continues to trade at a premium valuation of 9-10 times EV/2018 revenue versus the group average of six times.

Price Action

Shares of Snap were down more than 6.8 percent oat time of publication Thursday afternoon and hit a new all-time low of $7.66.

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Jefferies Cautious On Snap, Says Trends Are 'Not Encouraging'

Latest Ratings for SNAP

DateFirmActionFromTo
Oct 2019MaintainsNeutral
Oct 2019MaintainsOutperform
Oct 2019MaintainsNeutral

View More Analyst Ratings for SNAP
View the Latest Analyst Ratings

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StockFirmActionPT
BGNECLSADowngrades
SWKSMizuhoMaintains90.0
KEMB. Riley FBRDowngrades27.2
ROKGabelli & Co.Downgrades
SSRMB. Riley FBRUpgrades23.0
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