The old saying "just because you can doesn't mean you should" would seemingly apply to vanishing-message platform Snap (NYSE:SNAP), a once highly anticipated tech IPO that has since crumbled.

It's not so much that people aren't using the app -- it's actually quite popular, having been downloaded by users tens of millions of times -- it's that growth is slowing, and advertisers are apparently getting antsy about a lack of return on their ad dollars. With advertising as the companies main source of revenue, the fact that advertisers are getting cold feet, and rival Facebook (NASDAQ:FB) is stealing engagement away through its competing Instagram platform, begs the question: How long will it be before Snap collapses?

Where to begin?

Snap is facing a bunch of problems, with the biggest one arguably being the decline in daily user growth, which is plummeting. After having notched triple-digit gains early on in its life, Snap's user growth is well down into single digits for squential growth. And if the trend continues, they'll turn negative, too.

Chart comparing Snap's daily active users to their rate of growth

Data source: SNAP quarterly SEC filings. Chart by author.

While second-quarter daily users grew to 173 million, up from 166 million last quarter and from 143 million a year ago, the year-over-year growth is only 21% (and just 4% sequentially) which is a far cry from the 66% gains the company made when it reported 2016 second-quarter numbers.

Who's buying?

The declining usage rates led to Snap executives offering advertisers limited-time incentives to encourage brands and media buyers to feature their companies on the platform. Apparently, that didn't work as one analyst at Deutsche Bank said his check of advertisers found "a reduced imperative for advertisers to experiment with Snap advertising."

Even as Snap has reportedly improved its advertising vehicle, advertisers aren't quite as intrigued now, and their interest in the platform is described as both "mixed" and "waning."

That could be a big problem for Snap because more ad dollars are likely finding their way to Instagram, where users are spending as much as 32 minutes a day on the app on average, a little more than the 30 minutes the average Snapchat user is spending on its platform.

Instagram is basically doing Snapchat better than Snap is, and though it remains extremely popular among 18 to 24-year-olds, where it is the third-most popular app behind YouTube and Facebook, its reach is obviously hitting its upper limits.

Snap Spectacles

Image source: Snap.

99 problems and a Snap ain't one

Snap is also undergoing something of an identity crisis because it now wants to be known as a camera company. From selling Spectacles that take video to buying a drone company, Snap is saying the social media aspect isn't quite as important as the hardware used to make the connection. In fact, Snap's homepage immediately declares "Snap Inc. is a camera company."

While an argument can be made that the two are linked -- that being able to capture the moments people want to share is every bit as important as the app through which they do it -- it doesn't follow that Snap needs to become a hardware company in the process. Rather than additive, Snap is almost ceding the ground to the competition, and it could lose both, as GoPro's trials show.

Although Snap's stock has bounced off of its recent lows, it still remains severely depressed having lost half its value from the highs it hit right after it went public. There's little reason to expect Snap to continue moving higher. User growth rates are diminishing, advertising revenues may not be solid anymore, and the competition is gaining traction. While there may be some up days left in Snap's future, it could be the case that the vanishing message platform is a dead stock walking, and it really has nowhere left to go but down.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Facebook and GoPro. The Motley Fool has the following options: short January 2019 $12 calls on GoPro and long January 2019 $12 puts on GoPro. The Motley Fool has a disclosure policy.