By Senad Karaahmetovic
Shares of Snap (NYSE:SNAP) are down a further 2% after a Morgan Stanley analyst joined several of his colleagues in cutting the rating on the stock.
The analyst downgraded SNAP stock to Underweight from Overweight and cut the price target by over 50% to $8. The analyst blamed the downgrade on “significantly lower visibility”, as well as raising execution risk.
“We don’t think SNAP's ad business is as developed (and performance, "always on" driven) as we previously did...and growing this type of business through a weakening macro environment is likely to be even more challenging,” the analyst wrote in a client note.
The analyst also noted an increasing competition threat, mostly coming from TikTok.
“The platforms that are most at risk to losing dollars to TikTok are those that have ad businesses that are more branded dependent and less performance (transaction) driven. Our learnings from SNAP last week increase this risk,” the analyst added.
The slashed price target reflects lowered 2022/2023 revenues by c12% and c26%, respectively.
Snap stock price closed at $9.96, down 39.19% on Friday.