Shares of Snap Inc. dropped to a new all-time low on Wednesday morning, with Wall Street analysts raising concerns over the exit of high-ranking executives and a decline in Snapchat user engagement.
Snap’s stock fell more than 8.5 percent, hitting $9 per share in early morning trading, marking a record low for the company. Snap is now trading at nearly half its value when it went public in early 2017.
After losing 3 million daily users during the second quarter, Snapchat’s DAUs, as well the amount of time users spend on the app, is heading in the “wrong direction,” according to Jefferies analyst Brent Thill.
“Snap’s position as a communications platform and content distribution platform hinges on the need for users to have multiple friends on the platform,” Thill said in a client note shared with TheWrap. “If users begin to churn to other services” like Instagram, Thill added, it will give Snap’s remaining users “less incentive to open the app.”
Snapchat’s battle with Instagram has been well documented. Two years after Instagram copied Stories, Snap’s distinct feature allowing users to pin pictures and videos for 24 hours to their account, the Facebook-owned app is thriving. Instagram Stories now has 400 million daily users – double the amount Snapchat has.
Thill credited the company’s braintrust with being more open about its business plans, but said the recent departures of chief strategist Imran Khan and CFO Drew Vallero are “troubling.”
These concerns were echoed by BTIG analyst Rich Greenfield on Wednesday. Greenfield skewered Snap’s diminishing ad quality and “convoluted mess” of a redesign in a note to clients. (Snap CEO Evan Spiegel has acknowledged the app’s “choppy” redesign since its botched rollout earlier this year.) Greenfield also dropped his price target to the company to $5.
“We have not seen any meaningful innovation since the IPO; Snapchat has simply been out-innovated by Instagram,” Greenfield said.
Despite the mounting criticism, Snap’s faithful investors can point to Snapchat’s continued popularity with teenagers and its increased quarterly sales as signs of life.