Snap stock drops, setting a record low before recovering a bit

Snap Inc. took a hit Wednesday after BTIG analyst Richard Greenfield said in a note that he’s “tired of watching Snapchat decline from the sidelines” and that it’s time to sell the messaging app’s stock. His price target is $5, which would represent a roughly 50% decline from Tuesday’s close of $9.89.

Shares of Snap fell as much as 10% to $8.90, an intraday record low, before recovering somewhat. They ended the day down 7% at $9.20.

Since shares of Snap peaked in March 2017, the month it went public, shares have fallen more than 60% as the Los Angeles company has been beset by weak user growth, challenges to the business model, intense competition from Facebook, and executive turnover. The latest setback came this week with the departure of Chief Strategy Officer Imran Khan.

In his note, Greenfield cited several reasons to believe there’s more pain to come for Snap investors: “The company is burning cash, and raising new capital will not be easy,” “user growth is sliding,” “Story/discover engagement is falling,” “there’s been a dearth of product innovation,” “influencers are spurning the platform,” and “ad quality is falling,” he wrote.

With the downgrade and sell rating, Greenfield also lowered his revenue estimates for 2018, 2019 and 2020. His new price target of $5 is the lowest on Wall Street versus an average of $11.59, according to Bloomberg data.

Separately, Citi analyst Mark May reiterated Snap at a sell and reduced his price target to $8 from $10. He now sees less likelihood of a near-term takeover due to recent operational challenges after previously assuming 50% odds of a takeout.

UPDATES:

3:35 p.m.: This article was updated with Snap’s stock movement and closing price.

This article was originally published at 7 a.m.