What happened

Shares of Snapchat parent Snap (SNAP 2.06%) fell on Monday, down by 4% as of 1 p.m. EST, after getting downgraded by Jefferies. The firm cut its rating from buy to hold, citing risks related to the new app redesign.

So what

Analyst Brent Thill has been testing the new Snapchat app, which is in the process of rolling out, and believes the separation of social content from publisher content could end up hurting the business. Snap shares now trade at approximately 11 times Thill's estimate for 2018 revenue, which the analyst considers to be "fully valued."

Snap bot banner on the side of a building

Image source: Snap.

Meanwhile, Snap still needs to prove that it can execute in building its ad business. Jefferies has a price target of $15 for Snap shares.

Now what

Jefferies' move comes just days after Cowen downgraded shares last week, citing survey results that showed the vast majority of advertisers (96% of respondents) prefer to spend their ad budgets on Facebook's Instagram.

Snap is still working to improve the performance of the Android version of Snapchat, while such a major redesign of the core app always entails risks in terms of user engagement and monetization. The company is pursuing the redesign in response to long-standing criticisms that Snapchat's interface is unintuitive and difficult to use, but it remains unclear if it will resonate with users.