Shares of Snapchat parent Snap (NYSE:SNAP) have tanked today, down by 8% as of 12 p.m. EDT, after a Street analyst reduced estimates on the company. Cowen's John Blackledge reiterated his sell rating while lowering his price target on Snap shares from $10 to $9.
Blackledge reduced his estimates for both revenue and EBITDA over the next five years, primarily because the analyst is also lowering his expectations for daily active user (DAU) growth and advertising average revenue per user (ARPU). The analyst is modeling for Snap to have 194 million to 196 million DAUs in the second quarter, which would represent modest sequential growth from the 187 million that the company reported in the first quarter.
Blackledge estimates that Snap will post revenue of $248 million to $262 million in the second quarter, which is lower than the consensus estimate.
Cowen utilized a couple different surveys to gauge how Snap's business is doing, and the results were not flattering. The analyst estimates that U.S. users' daily engagement with Snapchat has declined 7%, with users now spending approximately 33 minutes per day on Snapchat on average.
Additionally, the firm conducted a survey of ad buyers, with Snap ranking lowest among all social media platforms in terms of "key attributes like ROI, data and user targeting." The survey results are similar to another one that Cowen conducted earlier this year that showed the vast majority of advertisers allocate most of their ad budgets to Facebook services.