Snap shareholders are having a difficult time.

Its shares are down significantly from their high on weaker-than-expected second quarter earnings, big insider selling lockups, increasing competition from Facebook and big-name hedge funds dumping the stock.

But one Wall Street firm is now saying the worst may be over.

Cantor Fitzgerald on Tuesday raised its rating for Snap shares to overweight from neutral, citing their “attractive” valuation after the social media firm’s large sell-off.

“We’re upgrading SNAP … to reflect the significant shift in risk/reward following expiration of the largest remaining lock-up period (8/14) and an 8.5% decline since Snap’s 2Q print,” analyst Kip Paulson wrote in a note to clients. “Although daily active user trends were disappointing in Snap’s first two quarters and the transition toward self-serve ad sales is [a] near term headwind on ARPU [average revenue per user] growth, it’s important to note that engagement is growing.”

Snap’s share price is down 57 percent from its high, reached days after the company went public on March 2. It is also down 26 percent from the $17 IPO price.

Paulson reiterated his price target for Snap of $15, representing 19 percent upside from Monday’s close.

Snap’s stock rebounded by 6 percent on Monday after touching a new all-time low. The shares were up 3.7 percent in Tuesday premarket trading.

The analyst noted that Snap’s co-founders have promised not to sell any more shares this year. In addition, two large insider lockup expiration dates such as the 400 million shares on July 29 and 782 million shares on Aug. 14 have passed, he noted.

“Bulk of the lock-up has now expired,” he wrote. “Much of the negative impact should now be behind the company.”

Paulson said Snap shares are trading at 14.2 times enterprise value to his 2017 sales estimate versus 30 times after its IPO.

“Valuation has improved substantially since [its] IPO,” he wrote. The “valuation now looks attractive to us.”

Nearly 70 percent of Wall Street does not have buy ratings on Snap shares, according to FactSet. Such a mixed view after a large technology IPO is a rarity.

Disclosure: CNBC parent NBCUniversal is an investor in Snap.

— CNBC’s Michael Bloom contributed to this story.