UPDATE: Morgan Stanley Double Downgrades Snap Inc (SNAP) to Underweight
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Morgan Stanley analyst Brian Nowak downgraded Snap Inc (NYSE: SNAP) from Overweight to Underweight with a price target of $8.00 (from $17.00).
The analyst comments "We Double Downgrade SNAP to UW ($8 PT, ~25% Downside) As5 SNAP Specific Risks (and a Difficult Macro) SignificantlyLower Visibilityand Raise Execution Risk... SNAP's disappointing recent 2Q results,3Q trends to date (flat Y/Y rev growth vs us previously modeling ~16% Y/Y growth in 3Q),and the 5 SNAP-specific challenges detailed in Micro vs Macro leave us more cautious about SNAP's forward revenue and profit outlook. Summingup the 5 factors, we don’t think SNAP'sad business isas developed (and performance, "always on" driven) as we previously did...and growingthis type of business through a weakening macro environment is likelyto beeven morechallenging. The largest new learning last week was that the post IDFA world caused some SNAP performance ad dollars to shift to branded ad spend (essentially continuing to spend on SNAP with less ROI/measurability). The macro challenge now is that those branded dollars are among the first to be cut in times of economic weakness. Combine this with the fact that in order to grow SNAP must continue to convince new advertisers to come onto the platform and experiment (which we think will be more difficult through periods of economic weakness) and the outlook becomes much less certain."
Shares of Snap Inc closed at $9.96 yesterday.
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