The BTIG analyst Richard Greenfield said in a new note to the company’s customers that he “was tired of looking at Snapchat’s crashes on the sidelines”, and that it was time to sell the stock, targeting price of 5 USD, which would mean a drop of approximately 50% against the yesterday’s closing at 9.89 USD per share.
The shares of Snap dropped by 8.7% on Wednesday to 9.03 USD, which is their lowest daily level so far. For comparison, at the IPO, the price was 17, USD and on the first trading day it reached even 24 USD per share.
Since the company’s shares reached its peak in March 2017, the month it became public, the stock has depreciated by more than 60% as the company is threatened by weak customer growth, challenging the business model, intense competition on Facebook and departures of key managers.
The latest failure so far has happened this week with the departure of Chief Strategic Director Imran Khan.
In his note, Richard Greenfield cites several reasons to believe that investors in the company will continue to suffer from depreciating shares.
The company is spending its cash and raising capital will not be easy. The growth of the number of users slows down, there is a lack of product innovation, the influencers already avoid the platform, and all this leads to a decrease in the quality of the advertisement.
In addition to lowering its target price and calling for sales, Richard Greenfield also lowered his revenue projections for Snap for 2018, 2019 and 2020.
The new 5 USD price target is the lowest on Wall Street versus an average of 11.59 USD.
Greenfield is not alone in his pessimistic assessments. Mark May of Citi also lowered his expectations for Snap with a “sell” rating. Now his target price is 8 USD against the 10 USD so far.