According to one firm, shares of Snap may soon be in a lot of trouble.
Suntrust Robinson Humphrey has initiated coverage on Snap shares and issued a “sell” rating, citing the competitive threat of larger rivals. Ahem, Facebook.
The firm gave the stock a $10 price target which is roughly a 22% decrease from where the stock closed this past Tuesday.
Analyst Youssef Squali wrote that Snap’s “challenges around bringing advertisers onto the platform at scale, and getting a sizable portion of their ad spend short term are likely to take time to overcome, causing the stock to underperform.”
“We also note a massive lock-up expiration of shares in the last two weeks, intense competition from Instagram/Facebook for users and advertisers.”
“Facebook/Instagram and YouTube are quick followers, constantly improving their value proposition as well, at materially greater scale,” he wrote.
It’s been a rough year for Snap. Shares are now down 57% since their high back in March, shortly after the company went public with an IPO price of $17.
Disclaimer: We have no position in Snap Inc. (NYSE: SNAP) and have not been compensated for this article.