WE ARE SORRY: BTIG apologizes for overestimating Snap (SNAP)

Evan Spiegel

Snap's stock price is falling after another Wall Street firm apologies for being too optimistic about the company.
BTIG reiterated its neutral rating of Snap, but significantly lowered its target numbers.
Get Snap's latest stock price here.

Another Wall Street firm is apologizing for its coverage of Snap.

Snap shares rose to a high of $29.44 in the days following the company's initial public offering in March before sliding to low of $11.83 in mid-August. BTIG initiated its coverage of Snap at $22.35 with a neutral rating, and for that, the firm is apologizing.

"With the stock down 28% in the past six months since our initiation at Neutral, we were wrong to not have a SELL rating," Richard Greenfield, an analyst at BTIG, said. "#wearesorry."

Greenfield says he overestimated the company's ability to rapidly monetize its platform. Snap's average revenue per user only grew 8.8% in the second quarter, well below the 28% growth that Greenfield was expecting. That caused Greenfield to half his prediction for revenue in 2020 to $4.1 billion.

Despite the new, lowered revenue numbers for Snap, Greenfield maintained his neutral rating on the company.

"There are so few ways to participate in the shift of consumer time spent to mobile outside of the dominance of Facebook and Google, Greenfield said. "In that light, we remain intrigued by the potential of Snapchat and its "sticky" user base making it difficult for us to see the stock as a compelling short at these levels."

While Instagram and Facebook have taken away from Snap's growth, Snap still has a set of users that love the platform, and they aren't going away anytime soon, Greenfield said. Figuring out how the company grows and monetizes its loyal user base is more of a question, though. BTIG gave updated numbers for revenue, user growth and monetization of Snap's platform, but said it has a "complete lack of comfort with [its] updated forecasts."

Snap is down about 2% after BTIG's report.

In July, Morgan Stanley, one of Snap's lead IPO underwriters, apologized for its overoptimism regarding of Snap's future. At the time, the company lowered its price target by 42% to $16, and said shares would fall to $7 in a worst-case scenario.