Snap Inc. (NYSE: SNAP) shares fell more than 2 percent on Monday after JPMorgan Chase & Co. (NYSE: JPM) cut Snapchat’s price target, citing concerns on the social media company.
JPMorgan lowered Snapchat’s target price to $18 from $20 with a neutral rating. The firm said it is worried about Snapchat’s ability to monetize its advertising business.
Last month, snapchat reported its first earnings report that fell short of analysts’ estimates. Although the revenue of Snapchat jumped from $38.8 million to $150 million year-over-year, the company reported a loss of $2.31 a share, sending the stock down more than 20 percent on that day.
JPMorgan also has concerns on the competition that Snapchat is facing. The firm are concerned that the competition from Facebook may has impact on Snapchat’s ability to attract new users.
In addition, JPMorgan is conservative on the future of Spectacles, Snapchat's smart sunglasses. It cut its projections sales to 429,000 from previous forecast of 915,000.
What’s more, the bank also warned that the expiring share lock-up on July 29 could weigh on the stock as about 70% to 80% of shares become available for sale.