Snap’s user engagement will decline as the messaging app’s customers move to other platforms, according to Evercore ISI.
The firm lowered its price target to $7 from $9 for Snap shares, citing the competitive threat from Facebook’s Instagram. The company’s stock closed at $8.23 Wednesday.
“We believe that competition (particularly from Instagram) is irreversibly reducing SNAP’s opportunity to deliver on long-term investor expectations,” analyst Anthony DiClemente said in a note to clients Thursday. “Given the lack of positive catalysts in the face of declining users and decelerating revenue growth, not to mention management turnover ahead of the seasonally critical 4Q, we lower our Target Price.”