Social media platform Snapchat has failed to monetize and prove it can boost its user numbers, according to comments by a Wall Street analyst that sent shares in Snap tumbling to a new low on Wednesday.
Since raising 3.4 billion US dollars in an initial public offering last March, Snap has fallen 60 percent amid falling user numbers, low engagement and criticism of its founder Evan Spiegel.
In a note to investors published Wednesday, BTIG analyst Richard Greenfield said "we are tired of Snapchat's excuses for missing numbers and are no longer willing to give management 'time' to figure out monetization."
Greenfield advised investors to sell Snap stock, and suggested its price could drop as low as five US dollars per share.
Last year's IPO saw shares priced at 17 US dollars, but the tumble since then saw prices drop to 9.89 US dollars on Wednesday, a slight recovery on the all-time low of 8.90 US dollars seen earlier in the day.
Spiegel's 638 million US dollar payout last year was the highest salary received by a chief executive in a decade. /VCG Photo
Greenfield's criticism of the company explicitly focused on Spiegel's "product innovation ability," with the analyst calling Snap's product evolution disappointing and unlikely to change.
In August, company data showed that the daily number of Snapchat users dropped for the first time, with a drop of three million users between the first two quarters of 2018. Many observers blamed several factors, including a redesign of the platform, attempts to monetize the app through advertising and celebrity Kylie Jenner's high-profile "goodbye" to Snapchat in February.
According to Business Insider, the 12 months from 2017 Q2 to 2018 Q2 saw Snapchat gain only nine million users. In comparison, its biggest rival Instagram welcomed more than 300 million new users over that same period.
Despite concerns over the long-term business model of Snap, the company posted revenue of 285.7 million US dollars for 2017, a 72 percent increase on the year before. In the second quarter of this year, revenue was up to 262 million US dollars, marking a 44 percent year-on-year increase.
The plummeting Snap stock price comes days after the company's chief strategy officer Imran Kahn announced his departure on Monday, and four months after chief financial officer Drew Vollero quit.
Founder Spiegel raised eyebrows earlier this year when company data showed he was paid 638 million US dollars in 2017, making him the world's highest-paid CEO.