Snap's shares fell further below their initial sale price today after Morgan Stanley, the lead underwriter on the company’s IPO, set a price target on the stock that was lower than its float price.
By the close, Snap’s shares had fallen 8.95 per cent to $15.47, down from the $29.44 intraday high they hit the day after the IPO.
In the Morgan Stanley note, analyst Brian Nowak wrote that “we have been wrong about Snap’s ability to innovate and improve its ad product this year.”
The bank cut its rating to “equal-weight” from “outperform” and slashed its price target to $16 from $28, below the median target of $19.50.
The ratings move was a rarity by a lead underwriter so soon after a listing. Goldman Sachs, another lead underwriter, still has a “buy” rating on the stock and an unchanged $27 price target.
Nowak raised concerns about Snap's ability to compete with Facebook Inc’s Instagram. Snap’s user growth trends have been weaker than expected.