Snap (SNAP), which tumbled after its second-quarter earnings report, weakened on Monday (25th), but Wall Street analysts continued to cut Snap’s forecasts.
Morgan Stanley analyst Brian Nowak released a research report on Monday, downgrading Snap’s stock rating from “overweight” to “underweight”, and the target price from $17 to $8, joining recent analysts’ downgrades of Snap, The ranks of financial forecasts and target prices.
The figures underscore Snapchat’s ad business struggling amid a weak economy and increased competition, especially from TikTok. Snap hit nearly 40% on Friday, and its losses eased on Monday, falling only 0.1% to close at $9.95 per share, and there was no reply after hours. The S&P 500 rose about 0.1% on the same day.
“The macro challenge right now is that in a weak economy, those brands are going to be the first to get cut. Combining that, and for Snap to grow, must continue to convince new advertisers to join the platform and try them out, we think that It’s more difficult in a weak economy, so Snap’s outlook is less clear.”
Nowak believes that these factors do not bode well, as Snapchat is competing with Douyin for brand spending. He expects Douyin’s revenue to grow significantly this year and next, building its brand advertising business by offering advertisers lower prices.
Nowak wrote: “The platforms most likely to lose revenue due to Douyin’s competition are those whose advertising business is more reliant on brand and less performance (transaction) driven, and we know from Snap’s earnings report last week that such The risk has increased.”