Snap (SNAP) tried to stop selling pressure on its shares with the revelation that Chinese internet giant Tencent Holdings (TCEHY) likely spent more than $2 billion acquiring Snap shares in recent weeks, but it's not helping.
Shares of Snap, known for its social media mobile-photography platform Snapchat, were down 16% this morning to $12.70, as a flood of analysts react negatively to disappointing growth revealed in the company's earnings report late Tuesday. Management said user growth will likely rely on accelerated adoption among users who are older, use Android devices and are international. The company needs Android app improvements and a simplified user experience, video streaming improvements and possibly wireless deals to boost growth.
Canaccord Genuity analysts Michael Graham, Austin Moldow and Scott Suh also lowered their price target to $12 from $15, writing:
Wells Fargo Securities analysts Peter Stabler, Ken Sena, Robert J. Coolbrith and Conor McDade lowered their price target to $13 from $15, and maintained their market perform rating. They write:
Tencent now owns a more than 12% stake in Snap. The internet company invested in Snap in 2013 before its initial public offering, and acquired 146 million shares recently, according to a Wednesday filing via The Wall Street Journal. The California-based co-founders Evan Spiegel and Robert Murphy, are the only owners of Class C shares, which control about 90% of the voting rights. Earlier this year, Tencent bought a 5% stake in Silicon Valley electric-car maker Tesla (TSLA).