Shares of Snap Inc. were falling 1.6% Friday morning after the stock was downgraded to market perform from outperform at Cowen Research. John Blackledge, lead analyst on the note, downgraded the stock based on increased competition for advertising dollars from Facebook Inc. as well as Pinterest. Snap’s advertising dollars are also hurt by seasonality in the business and a slower-than-expected ramp up of Snap’s direct response and self-serve products. Snap’s direct response and self-serve advertising products will likely not be meaningful until the second half of 2017 or early 2018, he wrote. This is the second downgrade of Snap this week, after Morgan Stanley analysts also reported delays in Snap’s ad products and increased competition from Instagram Stories. However, Snap also saw an upgrade from Stifel analysts who said competitive threats were not as bad as feared. Blackledge cut his price target to $17, which was Snap’s issue price at its initial public offering, from $21. Snap has a relatively large social audience and could expand its base and monetization efforts overseas, but as it stands Blackledge said its current strategy is “not a slam dunk.” Shares of Snap have lost 13.7% in past month, while the S&P 500 has gained 0.5%.
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