It has not been a great public life for Snap (NYSE:SNAP). Despite going public in 2017 to much fanfare, its stock currently trades below $7, a far cry from its $17 IPO price and the nearly $25 level it reached on its first day of trading. The culprit? Actually, there are actually several.

First, Facebook (NASDAQ:FB) property Instagram has copped many of Snapchat's best features. Second, last year's app redesign seems to have backfired, causing Snap to post its first quarterly loss of daily active users (DAUs) last quarter. Third, the switch to automated programmatic advertising has lowered Snap's price per ad, causing research firm eMarketer to reduce its full-year revenue projections for the company.

Meanwhile, Snap is spending huge amounts of money on cloud infrastructure costs and also investing in an uncertain new original content initiative. The company lost $353 million last quarter. That's a lot.

The news got worse on Monday, Oct. 22, when a new survey from research firm Piper Jaffray indicated Snap's core strength -- its cachet among teens -- may be eroding.

a skeptical male interviewer raises an eyebrow at an interviewer who points at a resume.

Image source: Getty Images.

Survey says...

While Snap's user growth has always underwhelmed compared with Facebook, the bull case for Snap was that it was popular with young people -- traditionally a sought-after advertising demographic. However, it seems as though Snapchat's popularity is slipping.

According to Piper Jaffray's 36th annual teen survey, Instagram has overtaken Snapchat in terms of usage among teens. Piper's survey showed roughly 85% of teens use Instagram at least once per month, compared with Snapchat's 84% -- the first time Instagram had surpassed Snapchat in that metric. In addition, almost 70% of teens said that Instagram was the best way for advertisers to reach them, compared with just over 40% for Snapchat.

For Snapchat, that may not seem like the end of the world. Monthly teen usage of 84% is pretty good -- in fact, it's an all-time high, up from 83% last year. And despite losing the usage race, Snapchat still remained the favorite among teens, with 46% identifying Snapchat as their favorite social app.

The problem isn't so much Snapchat's results by themselves, but rather how they compare to Instagram and its unstoppable momentum. Instagram's 85% monthly usage among teens was up 300 basis points from the 82% it posted last year. And while Instagram trails Snapchat in terms of favorability, it's gaining fast, increasing its favorite social app share from 26% in 2017 to 32% in 2018. Meanwhile, Snapchat's favorability seems to have plateaued, peaking in 2016 at 47%, before declining to 45% last year, and bouncing back to 46% this year.

Snap's actions speak as loud as surveys

When you combine Piper Jaffray's survey with Snapchat CEO Evan Spiegel's new recenly leaked strategic growth plan, one can't help but be worried about the health of Snap's core base.

Cornerstones of Spiegel's plans include growing developing markets and drawing older consumers, in addition to producing original content. Spiegel even declared that Snap wasn't a social media company, but rather, "the fastest way to communicate" -- whatever that means.

This is distressing for a couple reasons. For one, these plans seem challenging to pull off. Facebook and Instagram have already made huge inroads overseas. With Instagram now successfully copying many of Snapchat's best features, Snapchat could have a hard time breaking through as a second-mover.

Furthermore, Snap is a tough sell to older consumers. The app isn't particularly intuitive and much of the Discover content is bubblegum pop stories geared towards teens. 

All of this points to a CEO struggling to figure out how to grow beyond the market of teen- and millennial-focused social media, which signals that that core market may be saturated, or worse, threatened by competitor Instagram. And Piper Jaffray's survey confirms just that.

Snap is still too speculative

The main problem is that Snap still hasn't reached profitability, even as it seems to have reached the near-term limits of user growth and engagement in its core customer base. At the same time, expanding outside the base, while not impossible, is uncertain, and could be expensive. While Spiegel has outlined a "stretch goal" of profitability in 2019,  it's still only that -- a goal. 

At nine times sales and still losing money, Snap stock is still not exactly cheap, even after its recent decline. That, coupled with the recent Piper Jaffray survey, makes Snap still too risky and speculative for me.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.