A rough day for several tech heavyweights was led by Snap Inc.’s brutal showing on Thursday, with shares of the Snapchat parent company falling to a new all-time low on Wall Street.
Snap shares fell below the $8 threshold for the first time since it started trading in early 2017 — tumbling more than 7 percent to about $7.60 a share during midday trading.
The dip coincides with a new round of skeptical analyst forecasts. Citi dropped its target price for Snap to $7, as did Evercore analyst Anthony DiClemente in a note to clients. According to DiClemente, the thorn in Snap’s side, as usual, is Instagram.
“We believe that competition (particularly from Instagram) is irreversibly reducing SNAP’s opportunity to deliver on long-term investor expectations,” DiClemente said in his note shared with TheWrap. He added that “softening” user growth, along with there being “no evidence to suggest that Snapchat is meaningfully expanding the pool of advertisers,” all contributed to its lowered price target.
It’s true that much of 2018 has been an exercise in Murphy’s Law for Snapchat. The app lost 3 million daily users during the second quarter — with Snap chief Evan Spiegel pointing to its much-maligned app redesign as the reason users jumped ship. (Snap decided to redesign its redesign in May.) Instagram has continued to grow while leveraging many of the features Snapchat created first, boasting 400 million daily “Stories” users — more than double Snapchat’s entire user base. And a string of high-level departures, punctuated by the exit of chief strategist Imran Khan last month, has only drawn more investor skepticism.
But there are a few rays of hope for the Snapchat faithful. Despite its unsightly drop in users last quarter, Snap posted better-than-anticipated sales. It’s still wildly popular with teenagers. And the company has teased more original shows to come — perhaps giving old users a reason to check Snapchat out once again.