We’ve just begun 2019 and already things aren’t looking too great for Snapchat. Last week, news broke that its head of global strategic partnerships left; this was only a few months after its head of content and partnerships also departed. Meanwhile, the company had told employees it wouldn’t be giving out year-end bonuses, which reportedly significantly hurt morale even more. And the stock has been bottoming out over the last many months too.
Analysts aren’t too hopeful about the company’s future stock performance–at least not in the short term. Pivotal’s Brian Wieser sent out a new note updating his analyses for upcoming Q4 earnings reports. A few months ago, the firm gave Snap a “buy” rating. Now, it’s doing an about face.
Given all the inner tumult, writes Wieser, he thinks “concerns we have long held around employee churn are playing out.” In October, he gave the stock a price target of $8–he’s now lowered that to $6, along with a “sell” rating. One big reason for this, he explains, is that “[s]ignificant additional stock grants to key employees may be necessary despite their diluting effects.” This comes days after Goldman Sachs’s Terry Heath also downgraded Snap from “neutral” to “sell.”
Currently Snap stock is down by less than a percent in pre-market trading. We’ll see if these downgrades have an impact on its performance as the week goes on.