Snap shares were downgraded by analysts at Morgan Stanley on Thursday following the social media company’s torrid third-quarter results.

The analysts lowered their rating on the stock to und

erweight from equal-weight. They also reduced their price target to $11 a share from $14. Snap shares fell 2.1 percent in the premarket to $12.64. This follows a 15 percent plunge during Wednesday’s trading.

In a note to clients, Morgan Stanley analyst Brian Nowak said the company’s weak results “speak to growing challenges facing SNAP’s monetization potential and user opportunity.”

Nowak is the latest analyst on Wall Street to downgrade Snap shares. On Wednesday, analysts from RBC Capital Markets, UBS and Stifel —among others — downgraded Snap on the back of its results.

Snap reported third-quarter revenue of $207.9 million on Tuesday, well below the expected sales figure of $236.9 million. Daily active users — a key metric of engagement for Snap — totaled 178 million, below an estimated 181.8 million.

Nowak also said he sees “structural hurdles to SNAP’s core ad unit format and believe
the pending app redesign creates further engagement/execution risks.” Snap CEO Evan Spiegel said Tuesday after Snap’s results were released that Snapchat would get a redesign which will include a new feed inspired by Twitter and Facebook. Spiegel also said the redesign would make it easier for more people to use the app.

“Lastly, FB/Instagram competition is only increasing,” Nowak said. Snap has been losing market share to Facebook-owned Instagram, especially since it launched its Stories feature last year.

Source: Tech CNBC
Snap gets slammed with another downgrade: Morgan Stanley sees 'monetization' challenges