Snap Inc. (NYSE: SNAP) was under fire in Monday’s session after one key brokerage firm crushed any expectations about the company’s recently announced app redesign. This struggling social media company had announced the app’s redesign back in November, but it hasn’t hit users yet.
In November, CEO Evan Spiegel announced his plans to split the social and media aspects of the Snapchat platform. CNBC described the redesign as follows:
On the redesigned app, users will swipe to the left of the main camera screen to see chats, stories and messages from their friends, and swipe to the right for news, Snap Map and publisher content. The new Discover page reorganizes news from a horizontal scroll to a vertical, in the vein of Facebook’s and Twitter’s seemingly endless feeds.
Although this might be a noble move to separate “Fake News” and internet trolls from just a purely social platform, there are plenty of arguments against this move. One of the questions is whether this will affect the bottom line or drive away advertisers.
In the past, 24/7 Wall St. has called in to question Spiegel’s qualifications as a chief executive officer running a company like this. Maybe he needs some adult supervision.
At Jefferies, analyst Brent Thill had a chance to review the redesign. Thill ultimately doesn’t believe that this separation will be good for Snap. Jefferies downgraded Snap to a Hold rating from Buy with a $15 price target.
Jefferies isn’t the only firm passing on Snap. Cowen released a report last week in which the firm found that ad buyers ranked Snap lowest among social media companies. A majority of these ad buyers (96%) said that they would prefer to advertise on Instagram, the leading competitor to Snap.
Shares of Snap were down about 5% at $13.78 on Monday, with a consensus analyst price target of $12.22 and a 52-week range of $11.28 to $29.44.