Snap Takes Second Step Backward as Fall From Its High Nears 30%

Is Snap a Choice Between Growth and Engagement?

For traders who bought at the height of last week’s Snap Inc. lovefest, it’s getting a little uncomfortable.

Shares in the Venice, California-based photo app maker slid for a second day Tuesday, dropping as much as 12.3 percent. The losses brought the decline since Friday morning’s high-water mark to almost 30 percent and whittled the newly public company’s market value to below $25 billion.

One key point in the bear case on Snap is its growth trajectory. Earlier today, Aegis Capital analyst Victor Anthony, who rates the shares hold, published a note expressing concern on a continuing deceleration in the company’s daily active user growth so far in 2017.

Snap’s combined year-over-year user growth in January and February was 3 percent, versus 15 percent in the fourth quarter, according to Aegis’ analysis and app tracker data. Aegis estimates that Instagram’s growth in the metric this quarter is almost double Snap’s, suggesting it remains a formidable competitor.

Snap shares are trading amid what is sometimes a vacuum of positive research for newly public companies, a period in which banks who helped take it public don’t publish calls. Among seven analysts tracked by Bloomberg, none rates the company the buy, possibly reflecting the absence of analysts at underwriting banks who might have a more sympathetic view of the stock.