Snap is sliding after its 2nd downgrade in a week (SNAP)

pulse

July 14, 2017 2:31 PM

The downgrade is a result of worries over user growth and strong competition.

Snap's stock price has taken a lot of hits since its IPO, but according to a top tech analyst, it has a chance to rebound.

Blackledge downgraded Snap from a buy to a neutral and lowered his price target from $21 to $17. The downgrade is a result of Blackledge's worries over user growth and strong competition, according to CNBC. Instagram is a worry of many investors, as it has a larger user base and the backing of its huge parent company Facebook.

The downgrade is the second in a week for Snap. Morgan Stanley, one of Snap's IPO underwriters, lowered its outlook in an embarrassing admission of over-optimism. The bank cut its price target by 46% to $16 while downgrading the name.

Not everyone is pessimistic about Snap's future, however. Some investors are starting to Snap's low price as an attractive entry point, with shares down 37.49% since its IPO. Barclays believes investors are too worried about the expiration of Snap's lockup period, which will release around 950 million new shares for trading over the next month.

Additionally, Stifel thinks investors just don't understand the app. The bank compared Snap to Twitter, saying Snap was what investors wished Twitter could be: a company with a strong, loyal user base in a desirable demographic and a strong and growing ad platform.