It was another rough week for shares of Snap, Inc. (NYSE:SNAP), slipping 7.7% after a pair of analysts initiated coverage with uninspiring ratings. Things also didn't get any easier on the competitive front with a report claiming that Apple (NASDAQ:AAPL) is hoping to launch a video sharing and editing app that could possibly vie for Snapchat's young media-slicing audience.
Let's start with Wall Street. More than two dozen analysts have initiated coverage of the rapidly growing dot-com darling since its IPO more than a month ago, and that pace was expected to slow to a trickle after its underwriters put out their reports two weeks ago. Two new initiations took place last week, and both went with the equivalent of neutral ratings.
Jim Kelleher at Argus slapped Snap stock with a short-term "hold" rating. Like many skeptics, Kelleher thinks the stock is priced for perfection at current levels. He did open the door for a change of heart -- and a long-term "buy" rating -- if the stock continues to drop with its fundamentals remaining intact.
Rich Greenfield at BTIG Research followed, initiating coverage on Snap with a "neutral" rating. He's concerned that the stock appears fairly valued at its current $30.2 billion enterprise value, and it will take a lot of innovation to justify gains and spur headier growth in the future.
Bloomberg reported that Apple is in the process of developing a video sharing and editing app. Apple has been putting out video software for ages, but this would be a new iOS platform, and one that integrates easily with iPads and iPhones. There will be a social bent to the new offering, as Apple strives for deeper social ties within its product lines, and that could throw a wrench into Snapchat's popularity if it takes off.
The silver lining for Snap bulls is that Apple has struggled in the past to gain relevance on the social front. Does anyone remember when Apple's Ping tried to create a social layer to iTunes? If Apple tries to use the new platform as a way to keep iOS users close, it would also seem to suggest that it may not come out for the wider Android audience.
Snap has proved to be a volatile investment in its early days as a public company. It's had a move higher of lower of at least 7.7% in five of its first six weeks on the market. Last week's run is actually tame compared with the first four weeks of double-digit percentage gains before following that up with a 0.9% decline. The stock is still trading comfortably above its $17 IPO price, but another volatile week or two on the downside can change that. Snap is a stock that loves to move.