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Snap did what it said it would, so why is its stock struggling?

The Los Angeles tech company behind Snapchat offers a simple sales pitch to investors: The company’s market capitalization of around $18 billion sits right about where it did in the months leading up to Southern California’s biggest initial public stock offering. Financial analysts estimate the company will lose $3.3 billion this year, according to investment research aggregator FactSet. Investors and analysts say what has led the stock to drop is a creeping sense among investors that no matter how many creative features it launches, Snapchat just may be too small a player in the app economy to command a high valuation. At the moment, as Snap stares “down the face of very pronounced headwinds, we’d rather fish in better waters,” said Christopher Versace, chief investment officer at Tematica Research, which provides guidance to individual investors. Varieties include 10-second commercials bought by such companies as Adidas, Spotify and Emirates in addition to small decorative graphics that anyone can buy to celebrate an event. Snap in recent months introduced more sophisticated measures to help retailers track whether ads lead to in-store visits and purchases. Others have voiced concerns about users skipping ads on Snapchat and the special effort required to design commercials for the app. Versace, the investment research analyst, said Snap also could take a hit if companies lower their growth forecasts after initially thinking the economy would grow faster under President Trump. On Wednesday, Arkansas Attorney General Leslie Rutledge joined numerous schools and public officials in alerting consumers to be cautious about Snap Map.

Article by By Paresh Dave (c) Business and Technology News - Read full story here.