Snap still can’t make a good Android app, and its stock is paying the price

Snap Inc.’s Android relaunch has been in the works for almost a year, and the company still isn’t ready to say when it will be ready for general consumption. Now, some on Wall Street are growing more impatient with the delay and wondering whether the new app will even matter.

The beleaguered social-media company has long offered a better experience to iOS users than to Android ones, but as user-growth issues mount, the company is betting that a refreshed Android product can help build interest in the platform. On Snap’s

SNAP, -10.16%

 third-quarter earnings call Thursday, Chief Executive Evan Spiegel reiterated his belief that an Android refresh could help user numbers but said that Snap is “going to wait until we get it right before we roll that out broadly.”

Snap shares are off 13% in Friday trading after the company released its earnings the prior afternoon. The company beat estimates on the top and bottom lines, but it posted a sequential decline in daily active users for the second straight quarter. Management expects another such decline for the December quarter.

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Canaccord Genuity analyst Michael Graham, who lowered his price target to $8 from $12 but kept his hold rating intact, wrote that “it seems clear that the development effort at Snap is struggling” given the lack of time frame on the Android launch.

Needham’s Laura Martin, who has an underperform rating on the shares, highlighted Wall Street’s impatience with the ongoing Android issues. “Since other tech companies deliver services on both iOS and Android without incident, investors wonder why Snap still hasn’t fixed its Android problem,” she wrote.

Evercore ISI analyst Anthony DiClemente, a bear on the stock, questioned whether the eventual update will even be effective. “With Instagram Stories continuing to show growth of about 50 million per quarter, it’s unclear to what extent Snap will be able to recapture users currently unable to access the platform,” he wrote. DiClemente has an underperform rating and $5 target on the shares.

J.P. Morgan’s Doug Anmuth downgraded the stock to underperform from neutral, also citing competitive pressures. “While we are encouraged that Snap’s product has improved from its initial redesign, we believe growing DAUs will be challenging and the competitive landscape for both user time and advertiser dollars remains intense,” he wrote. Anmuth slashed his target price to $6 from $12.

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Others were more upbeat. “We are confident that Snap will roll out its redesigned Android version during 2019, and are equally confident that the addition of [Jared] Grusd will help the company to drive increased engagement on its platform,” wrote Wedbush analyst Michael Pachter, who rates the stock at outperform with a $12.25 target. Grusd comes from HuffPost and will be Snap’s chief strategy officer.

Of the 37 analysts tracked by FactSet who cover Snap, eight rate it a buy, 17 rate it a hold, and 12 rate it a sell. The average price target is $8.84, 49% above current levels. At least three analysts cut their targets on the stock after Thursday’s results.

Snap shares have tumbled 58% so far this year, while the S&P 500

SPX, -1.73%

 is flat on the year. If Friday’s losses hold through the close, Snap would record its worst single-day stock performance since early May.

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