Snap Inc. (SNAP) shares fell sharply in premarket trading Thursday after the social messaging app was downgraded to "underperform" by research group Cowen & Co.

Analyst John Blackledge also cut his price target on the stock to $11 each as he reduced his view on the group amid a larger report on the broader U.S. digital advertising market, which indicated that 96% of ad buyers preferred Instagram stories versus the 4% that preferred the Snapchat messaging app platform. The firm previously had Snap rated at "market perform" with a price target of $11 each. 

1/ Our Internet and Media teams release Cowen's 6th annual survey of US ad buyers. #AheadOfTheCurve report sees US Digital adv. revenue growth +19% y/y in '18 (vs. +15% y/y prior forecast)

— COWEN Research (@CowenResearch) January 4, 2018

Snap shares were marked 2.48% lower in premarket trading in New York Thursday, indicating an opening bell price of $14.93 each, a move that would trim its three-month gain to just 2%, well shy of the 8.2% advance for the Nasdaq Composite benchmark.

The stock has failed to find support at the $15 level even after China's Tencent Holdings Ltd. (TCEHY) revealed last month that it built a 10% stake

Tencent, which owns China's biggest social media app WeChat, told Snap that it purchased around 145.78 million non-voting Snap shares on the open market, taking its overall stake to the 10% threshold that requires formal notification.

The investment announcement came just hours after Snap revealed weaker-than-expected third-quarter earnings and vowed to re-design its flagship messaging app.

Snap posted a loss of 14 cents a share in the three months ended in September while revenue, the bulk of which come from selling ads, did rise 61% to $208 million, but even that figure trailed analysts' estimates of $237 million. Revenue per user, a key metric for the group, increased to $1.17 but again fell shy of the Wall Street consensus of $1.30.

The dispiriting numbers -- not to mention the stock's 48% decline since its post-IPO peak -- were not lost on the company's founders, including Evan Spiegel, who essentially pledged a hard re-set of the hard-to-use app which is slowly losing the hold it once had on the imagination of users and investors alike.

"The one thing that we have heard over the years is that Snapchat is difficult to understand or hard to use, and our team has been working on responding to this feedback," Spiegel told investors on a conference call. "As a result, we are currently redesigning our application to make it easier to use."

"There is a strong likelihood that the redesign of our application will be disruptive to our business in the short term, and we don't yet know how the behavior of our community will change when they begin to use our updated application," he added. "We're willing to take that risk for what we believe are substantial long-term benefits to our business."

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