Snap is getting its filters handed to it by Instagram

If Snap is competing with Facebook’s Instagram, Wall Street doesn’t like its odds.

Snap, owner of the ubiquitous SnapChat app, went public in March in one of the most heavily hyped recent public offerings of new shares in a hot tech company.

Initially, the stock price soared. (The stock jumped 44 percent from its IPO price in the first day of trading.) But since then, things haven’t been going so well.

The SnapChat maker’s revenue and user growth have been underwhelming. And now analysts are getting impatient with Snap’s weak performance, wondering whether the Venice, California-based company can ever do more than tread water as it’s circled by the big blue shark that is Facebook. Here are a few things weighing down the stock that everybody was excited about just a few months back.

• A “lockup” period on selling Snap shares is due to end July 29 for the company’s pre-IPO shareholders, executives, and employees. Lockups are meant to stabilize the early trading of a stock—by keeping insiders from selling at the first chance—but their expiration often brings additional selling pressure as the supply of available shares goes up.
• Snap isn’t the only tech stock struggling post-IPO right now. Blue Apron, which went public June 29 at $10 a share, tumbled to $7.14 on Tuesday after receiving a “sell” rating from Northcoast Research.
• Morgan Stanley analysts downgraded their view of the shares Tuesday, sending shares of Snap spiraling by 9 percent on Tuesday to $15.47 a share, below the $17 per share IPO price.

Giving back all the gains from an IPO is something of a symbolic milestone for tech companies. Even the mighty Facebook slipped below its IPO price early in its life as a public company, and it’s doing just fine now.

On the other hand, Facebook enjoys the considerable advantage of not having to compete with Facebook. Snap isn’t so lucky, with Facebook’s Instagram platform representing an especially potent threat. Its Instagram Stories feature, which competes directly with SnapChat, recently tallied 250 million daily active users, compared to the 166 million reported by Snap in its first-quarter earnings report in May.

It also seems that advertisers are having a harder-than-expected time figuring out how to effectively target customers on SnapChat, according to Morgan Stanley.

“SNAP’s ad product is not evolving/improving as quickly as we expected, and Instagram competition is increasing,” the bank’s analysts said in their note downgrading Snap on Tuesday. “We have been wrong about SNAP’s ability to innovate and improve its ad product this year.”