Investors are giving up hope on Snap Inc (NYSE:SNAP), as no effort by the social media company to increase growth seems to be working. for Snap is also devoid of long-term growth catalysts. Earlier this month, investment firm BTIG slashed its 2020 revenue estimates for Snap to half. The firm even apologized for not recommending its clients to sell the stock sooner. However, BTIG still didn’t gave a “Sell” rating to Snap stock. BTIG analysts said in the report that they remain “intrigued” by the potential of Snapchat amid its user base and engagement. However, they are disappointed by the company’s lack of strategy to make money of its growing users.
Snap’s management is focusing on product development and hoping that new features will result in explosive growth. But the company is constantly challenged by the rising popularity of Instagram. Snapchat losses are burgeoning and investors’ patience is running out.
One of the biggest strengths of for Snap is its ability to captivate the teenage audience around the world. Piper Jaffray recently said in a report that teens prefer Snapchat over Instagram and Facebook. But Snap’s management isn’t tapping the gigantic user base outside the US. Snapchat’s Android problems are still ongoing. Earlier this year, Snap admitted in a filing that Snapchat’s Android app problems were the major cause of lack of growth. It’s important to note that Android phones are more popular in emerging markets like Asia and Africa.
Snap is also losing its appeal for advertisers. User growth becomes empty of value when it’s not backed by monetization. A recent survey shows that teens prefer to be approached by marketers on Instagram. This is why advertisers are ready to spend more money on Instagram ads.
Business Insider’s Alex Health recently published a bombshell report, which shows that Snap’s much hyped “Spectacles” are losing traction. The report claims that Snap sold just 150,000 Spectacles last year. What’s more shocking is that less than half of the customers who buy Spectacles stop using the product within four weeks. The report cited a person familiar with Snap’s internal data, who claims that a “sizable” percentage of owners stop using Spectacles within a week after buying. All of this makes Snap stock highly questionable, and likely worth selling sooner rather than later.
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