Wall Street just isn’t as enthusiastic about Snap Inc (NYSE:SNAP) like millennial and Generation Z users may be. Snapchat has been hit with another “sell” rating by Wall Street.
In a note to investors, MoffettNathanson initiated its coverage with a “sell” rating by alluding to sluggish DAU growth, limited revenue and profitability. The Wall Street firm has given the tech giant a target price of $15.
“As a result, we believe its current valuation ‘bubble’ at 7X 202 EV/revenue is set up more for a [Twitter] like pop over the next year than a steady rise from today’s levels,” analyst Michael Nathanson wrote. “SNAP’s income statement is going to look a lot more like [Twitter] than [Facebook].
This brings the total number of “sell” ratings to six as well as three “holds.”
Here are the ratings so far:
Needham – Underperform (Sell)
Atlantic Equities – Underweight (Sell)
Morningstar – (Sell)
Aegis – (Hold)
Susquehanna – (Hold)
Nomura Instinet – Reduce (Sell)
Pivotal Research – (Sell)
CFRA Research – (Hold)
FBN Securities – Sector Perform
Cantor – Underweight
MoffettNathanson – (Sell)
Despite its initial jubilant fanfare from investors earlier this month, the social media application has seen its share price plunge nearly 25 percent from its all-time high of $29.44. Since then, the stock has traded below its post-IPO price, which means early investors are trading in negative territory. At the start of Thursday’s trading session, Snapchat shares were down more than two percent to $20.35.
The social media behemoth has yet to make a profit, and the firm warned that it may never be profitable. Last year, the social media app lost more than $500 million.
Why did speculators expect this stock to skyrocket in perpetuity?
This is the dot-com era all over again.