Shares of Snap Inc. (SNAP) - Get Report were plunging more than 5% to $16.10 in opening trading on Tuesday as Morgan Stanley (MS) - Get Report , one of the lead underwriters that helped take the company public, downgraded the stock from Overweight to Equal Weight. The firm also slashed its stock price target to $16 from $28. 

Snap's stock slid below its $17 IPO price for the first time on Monday, ending the day at $16.99 per share. The stock has fallen 30% so far this year, as investor concerns have swelled over its lack of profitability, future growth and rivalry with Facebook Inc.'s (FB) - Get Report Instagram. Shares hit an all-time high of $29.44 on March 3 (the day after its IPO), but has declined steadily ever since. 

Morgan Stanley analyst Brian Nowak wrote in a note to clients there are four "larger than expected" challenges to Snap's business: brands are struggling to create ad campaigns on the app, return on investment for advertisers hasn't improved significantly, its self-serve ad platform hasn't been scaling quickly and Instagram is a greater threat to Snap than the firm had expected. He estimates that Instagram has more than 450 million daily active users vs. Snap's 166 million DAUs. 

"We have been wrong about Snap's ability to innovate and improve its ad product this year (improving scalability, targeting, measurability, etc.) and user monetization as it works to move beyond 'experimental' ad budgets into larger branded and direct response ad allocations," Nowak explained. "We also believe user growth trends have also been modestly weaker than expected, though time spent per user (now at 30+ minutes a day) has been strong." 

Nowak also cut his fiscal 2017 and 2018 revenue estimates by 7% and 13%, respectively. He now expects Snap to bring in $879 million in 2017 and roughly $1.67 billion in 2018 in revenue. That's compared to consensus estimates for $988 million in 2017 and $1.91 billion in 2018, respectively. 

Making matters worse, Nowak pointed to recent data from app-tracking service Sensor Tower that showed Snap's U.S., Europe and rest of world app download declines have accelerated between 15% and 30%. He said the data doesn't necessarily indicate that Snap's DAU growth is slowing, but still represent "troubling directional trends." 

He expects Snap to have 182 million DAUs in 2017, which is slightly lower than Wall Street's projected 186 million.