If Snap's (NYSE:SNAP) stock is any indication, the camera company that went from market darling to goat is once again capturing investor hearts. After losing over 60% of their value in 2018, shares have soared about 110% so far this year.

The gains have occurred because the fundamentals of the social-sharing platform appear to have improved. Revenues jumped 36% last quarter, much better than anyone was expecting, and the decline in user growth has flattened. With a bunch of new user-engagement enhancements and the release (finally!) of a revamped Android app, investors are betting there's potential for Snap to snap higher again.

Unfortunately, it's likely Snap will lose monthly users this year instead. When that's coupled with a management team that's still blind to its real problems along with a fault line festering underneath and ready to break open at the slightest weakness, Snap is about to see its stock tumble once more.

Smiling couple taking selfie in front of lake, with mountains in the background.

Image source: Getty Images.

No snap judgment

eMarketer says Snap is poised to lose monthly users for the first time ever in 2019. Just last October, the industry analysts had been predicting better than 6% growth this year, but they're now forecasting that the social camera site will lose over 2 million users before growth flatlines in 2020.

Between 2019 and 2023, eMarketer expects Snap will only add 600,000 new users, essentially remaining in maintenance mode with about 78 million monthly users. The salt in the wound is that eMarketer predicts Facebook's will add almost 19 million new users in the U.S. during that time.

The problem, of course, was the redesign of Snapchat, which caused users to abandon the app, and despite rolling back many of the changes, users haven't returned. Although Snap revealed several new features at its partners summit earlier this month, such as free-to-play Snap Games and new short-form Snap Originals, there's not much incentive for users to come back to Snapchat in great numbers. Much of what is new for Snap is available on other platforms, too.

Taking the wrong cues

The years-in-the-making Android update may also be too little, too late. The existing Android app offered little reason for users to try to access the platform, but even while Snap promised that a fix was in the works, none materialized. That's given Snapchat's rivals years to instill loyalty in Android users, and those bonds won't easily be broken now that Snap has finally released its newest version.

Moreover, founder and CEO Evan Spiegel maintains that Snap is a communications device -- the fastest way to communicate! -- even though users have numerous messaging and texting apps available to them that are pretty zippy already. And that's not how people think of Snapchat anyway, so Spiegel's insistence that it is looks very similar to his doggedness in maintaining that the app redesign was great.

He also sees growth potential in attracting older users to the platform, but that will likely be the death knell for the app among teens when it's seen as using the same platform as your mom or dad.

Teens abandoned Facebook in droves as older adults took over the platform. While it's arguable that that's the cause of teen participation in Snapchat, Piper Jaffray's latest survey on teens found just 6% of teens use Facebook compared to the 22% that had been doing so just six months ago. And though Snapchat currently remains their favorite, Instagram is the one they cite as the social-media platform they use the most.

Key investment takeaway

If eMarketer is right that Snap will lose users, it could jeopardize the cloud-computing contracts it was recently forced to renegotiate because of the decline in users it was already experiencing. As my colleague Adam Levy explained, Snap may face an uncertain financial future if it's continuously locked into expensive contracts that promise growth that never comes.

It's possible Snap may find the right formula to bring back users and expand its base. Growth in international markets, for example, is also a prime objective of the camera company, yet the business is built on marketing the app to advertisers based on increased engagement. That doesn't seem to be materializing anytime soon, suggesting the doubling in its stock over the past four months may be as good as it's going to get and it's now ready for a fall.