Updated from 10:07 a.m. with additional information.

It's been a rough week for Snap Inc. (SNAP) . 

On Monday, the stock fell below its $17 IPO price for the first time. That bad news was compounded by a downgrade on Tuesday from one of the Snapchat parent company's biggest underwriters, Morgan Stanley, who said it was wrong to believe Snap could innovate and grow its ad product. The move caused Snap shares to hit a new all-time low on Tuesday, and they fell an additional 1.4% to $15.24 on Wednesday. The stock has dropped 11.2% so far this year. 

Snap was seen as a Wall Street darling when it went public in March, but a lot has changed since then. The social media upstart has tried to prove to investors that it can quickly scale its business, achieve profitability and fend off tough competition from Facebook Inc.'s (FB) Instagram.

The company has rolled out several new ad products in the past few months in an attempt to court more brands, including a self-serve ad manager targeted for small businesses, as well as a way to measure which ads are driving in-store traffic, among other features. It also released new creative tools for users, such as Snap Maps, which lets users share their location inside an interactive map. 

Despite this, investors and analysts have become skeptical about whether or not the new ad features and user tools will help lift Snap's bottom line.

On top of that, the FTSE Russell could soon adopt a proposal that would allow it to exclude companies with only non-voting rights from some if its equity indices, possibly including the Russell 3000. That's bad news for Snap, which uses the complicated and restrictive non-voting structure, because it would mean that major institutional investors, such as big pension funds, won't be investing in the company, adding to the factors that have begun to weigh on Snap's stock. The index firm could make a decision as soon as this month.

Others caution that Snap may have more trouble on the horizon once its lockup period expires on July 31. When that happens, company insiders (employees, directors and venture capitalists) will be able to sell their shares on the public market, which could send the stock significantly lower. Credit Suisse analyst Stephen Ju estimates that as many as 711 million shares could flood the market once it expires. 

Shares of Facebook, Twitter Inc. (TWTR) and LinkedIn (now part of Microsoft (MSFT) ) fell an average of 24% in the 30 days before their lockup periods expired, according to MKM Partners analyst Rob Sanderson. So far, Snap has fallen 12.9% since the beginning of July. 

But while Snap's stock may have a few down days or months after the lockup period expires, analysts have said that lock-up expirations don't usually have much of a long-term impact. In a note to clients on Wednesday, Barclays analyst Ross Sandler argued that there could be a buying opportunity after the heavy lockup volume subsides, likely halfway through the fiscal third quarter. 

"The impact would only be short term," agreed Morningstar analyst Ali Mogharabi. "Everyone is going to focus on fundamentals -- how their daily active users are growing, whether or not revenues continue to grow at strong double-digit rates and whether they're close to generating some cash." 

Competition from Facebook poses a greater risk to Snap than the lockup period, Mogharabi said. The social media giant announced on Tuesday that it will soon bring advertisements to Messenger's home screen, after seeing success from a beta test in Australia and Thailand.

The feature would give advertisers new access to Messenger's 1.2 billion monthly users. It could also sway them from spending their ad dollars on Snapchat, Mogharabi said. In talks with advertisers, Mogaharabi said many still view Snapchat as part of their experimental ad budget. 

"It's not yet a serious allocation of [brands'] ad dollars -- not like they are with Facebook or with YouTube and other digital ad players," he said. "It could take ad dollars away from Snapchat. That's something to keep in mind." 

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