Last Wednesday, Snap, a tech giant, lost almost 10 percent of its share price after an influential analyst published a disparaging note on the fortunes of the firm. It was also slapped with a “sell” rating.
In a note, Richard Greenfield, an analyst at BTIG, urged investors to sell the stock. He said that he was “tired of watching Snapchat decline from the sidelines.”
He stated: “We are tired of Snapchat’s excuses for missing numbers and are no longer willing to give management “time” to figure out monetisation.”
He continued: “Additionally, we have said since the IPO that a bet on SNAP was also a bet on Evan Spiegel’s product innovation ability. We have been disappointed in SNAP’s product evolution (as have users) and see no reason to believe this will change.”
The analyst’s note comes after the Imran Khan, the second in command of the company, announced that he was stepping down from the tech giant earlier this week.
Since the shares of Snap were able to peak in March 2017 after its float on the New York Stock Exchange, the share price of the company has dropped by approximately 60 percent as it experienced a tough time in a difficult market. Quick exec turnover, weak growth, and the huge competition from Facebook have all greatly affected Snap.
Greenfield added: “We incorrectly stuck to our neutral rating in October 2017 due to our view that communications apps were sticky and would protect Snapchat engagement, with management simply needing more time to figure out monetization.”
The analyst also explained his reason for the sell rating. He noted the rate the company burned through cash, low growth in the number or users, and a lack of product innovation as the contributing factors.
He also reduced his price target for the tech share to $5. That is less than a quarter of what the shares were worth when it floated at $27 per share.