California-based tech and social media company Snap Inc. (SNAP) fell 16 percent in after-hours trading after the company reported disappointing third-quarter earnings. Snap missed on revenue, EPS and daily active users while posting a net loss of $443.2 million leading to a slew of downgrades. 

New York-based Pivotal Research said the changing source of its ad revenue would provide significant headwinds for the company. "Revenue deceleration was attributed to an increased reliance on programmatic ad sales; 80% of impressions were delivered programmatically in 3Q 17 vs. 0 in 3Q 16," Brian Wieser of Pivotal Research Group said in a note. 

"Management indicated that this caused advertisers to shift from direct sales to unreserved auctions, reducing CPM-based pricing by -60% year-over-year."

Wieser and Pivotal Research lowered its price target to $8 per share, a 41 percent fall from the $13.77 share price at time of the report, and remains its sell rating on the stock. (See also: Snap Spells More Trouble for Investors.)

It has been a tough ride for shareholders of the messaging app. After its initial public offering (IPO) price of $17 a share and the ensuing rally above $29 a share, it has been all downhill, falling five consecutive months to a low of $11.28 in August. 

In addition to the revenue struggles, Wieser added Snap faces a number of company-specific risks including competition from larger companies, slow user growth, high expenses and management issues. "The company has a sub-optimal corporate structure operated by a senior management team lacking experience transforming a successful new product into a successful company," Wieser said.

In more encouraging news, a filing from the Securities and Exchange (SEC) showed Chinese Internet company Tencent had taken a 10 percent stake, purchasing 145.8 million non-voting shares during the last quarter.



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