Snap Inc. Stock Plunging and Intensifying Issues, Analyst Warns





Snap stock is plunging and ‘issues are intensifying,’ analyst says




Snap Inc.’s stock is plunging and issues are intensifying, according to a Wedbush analyst.

The social media company’s shares were down by more than 9 percent in Tuesday trading after Wedbush analyst Michael Pachter downgraded the stock from an underperform rating to an even lower rating of a sell.

Snap shares have now plummeted almost 50 percent since its IPO in March.

Pachter pointed to a “user engagement crisis,” saying that growth in the number of active users was below expectations.

He also noted that the company’s increasing reliance on third-party app developers to create content, slowing user growth, and falling ad prices were all “issues [that] are intensifying.”

Pachter also said that the company’s decision to roll out augmented reality lenses and other features had yet to pay off in terms of user growth or monetization.

Snap has struggled to keep up with its competitors, particularly Facebook’s Instagram, which has a larger user base and has managed to position itself as the go-to platform for user engagement and content.

The company’s stock has been on a downward spiral for months, as investors worry about a lack of innovation and a failure to capture the attention of younger users.

Snap sought to show that it was still a viable contender in the social media world last week, by releasing a “new look” for its platform.

But the company’s troubles are far from over. It is still struggling to make money, and the new look has yet to translate into meaningful user engagement.

Until the company can make a significant impact on user engagement and monetization, Snap’s stock is likely to continue its downward trajectory.

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