When Snap Inc. (SNAP) reported earnings earlier this month, shares surged from $14 to roughly $21 in just one day.
While Snap stock gave up some of those gains in the following trading sessions, it looked to be well on track to retesting its most recent highs. However, it won't be happening on Tuesday, thanks to a downgrade from Citigroup.
Analyst Mark May downgraded the stock to sell from hold and cut his price target to $14 from $18. Shares fell 8.3% on the day.
This comes despite a quarter that received a very positive reaction from many on Wall Street. After all, shares rallied almost 50% in just a day. While some analysts were still hesitant to endorse Snap stock, many were back on the bullish bandwagon, contending that the company has hit a turning point.
In May's case, he argues that the recent app redesign has received a "significant jump" in negative reviews. While it could lead to "positive long-term benefits," users clearly aren't happy with the new look. Should it negatively impact user growth and user engagement, it could hurt the stock, he says.
Further, Snap stock has an unattractive valuation and pricing pressure could hurt its business, he added. His $14 price target still implies more than 27% downside from current levels, despite Tuesday's fall.