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Co-Founder and CEO of Snap Inc. Evan Spiegel.
- Snap tumbled below $8 per share on Thursday to the lowest level on record.
- Shares have been under pressure since the social-media company said on August 7 that its number of daily active users fell for the first time.
- Competitive pressure from Instagram will cause Snap to lose another 1 million daily active users in the third quarter, said Evercore ISI's Anthony DiClemente.
- Watch Snap trade in real time here.
Snap shares plunged below $8 on Thursday - their lowest level on record - after facing several downgrades on Wall Street.
Anthony DiClemente, an analyst at Evercore ISI, said Thursday that Instagram is "irreversibly reducing" the company's ability to meet investors' long-term expectations.
Snap would lose 1 million daily active users in the third quarter, driven by the app's redesign and a seasonally weak period, Di Clemente added, slashing his price target to $7 per share from $9.
The social-media company has been under pressure since it released its second-quarter results on August 7. While the company beat sales and profit estimates, its number of daily active users fell 2% from the first quarter to 188 million, its first-ever decline. Wall Street analysts were expecting that number to increase to 193 million.
The declining user trend is a huge problem for Snap as its survival as a social-media platform depends on the need for users to have multiple friends using it, said Jefferies analysts Brent Thill and Brian Fitzgerald recently. If users turn to other platforms like Instagram, Snap's other strategies such as feature updates would go in vain, they added.
Meanwhile, Citi analyst Mark May also reduced his price target to $7 from $8 as he was bearish on Snap's recent user-growth and revenue trends.
Snap now has has 8 buy, 16 hold, and 12 sell recommendations from Wall Street analysts, according to Bloomberg data.
Shares have lost 48% this year.
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Business Insider