Snap Inc. (NYSE: SNAP)
Morgan Stanley, the lead IPO underwriter for Snap Inc. has lowered its price target for shares of the social media company to $5 from $7, and maintained its underweight rating. The new price target is 17 percent below where shares of the Snapchat-parent company were trading yesterday.
Brian Nowak and other analysts at Morgan Stanley issued a note saying, “At a high level, we expect Snap’s smaller user base to be a further headwind to revenue growth (fewer eyeballs, ad impressions, and time to monetize).”
“In addition, our latest industry conversations continue to point to ad performance and monetization challenges around the ‘Stories’ format across the ecosystem (Instagram, Facebook, and Snapchat.),” the note read.
Mr. Nowak and his team don’t expect the Snap to have a positive free cash flow anytime soon. “We see slower user and advertising growth holding back free cash flow,” the analysts said. Morgan Stanley also said its bear case for Snap shares was $3.
The banking giant was the lead underwriter for Snap Inc. in 2017, when Venice, CA-based social media went public two years ago. The company raised $3.4 billion in the $17-a-share initial public offer but investors later pushed the price up by an eye-popping 44% in its first day on Wall Street.
Last week, Snap announced the departure of its chief financial officer Tim Stone, barely a year after joining the company. In a filing with the SEC, Snap said that Stone was leaving the company because he wanted “to pursue other opportunities.” News of his exit rattled investors and sent the stock down 8%.
On Friday, shares of Snap were changing hands at $6.32 after a gain of 2.51% as of 1:18 p.m. in New York.
Snap Inc. Profile
Snap Inc. operates as a camera company in the United States and internationally. The company offers Snapchat, a camera application that helps people to communicate through short videos and images. It also provides Camera, a tool to personalize and add context to Snaps; Friends Page that allows to creating and watching stories, chatting with groups, making voice and video calls.
In addition, the company offers Snap Map, which enables individuals to pinch on the camera screen for bringing a live map of their location, as well as showing nearby friends, popular stories, and a heatmap of recent Snaps posted to their story; Memories that allows users to choose to save the Snaps they create in a searchable personal collection, and users to create Snaps and stories from their saved Snaps and camera roll.
The company was formerly known as Snapchat, Inc. and changed its name to Snap Inc. in September 2016. Snap Inc. was founded in 2010 and is headquartered in Venice, California. – Yahoo Finance