Snap share price fumbled significantly in the last couple of months after hitting a 52-week high of $21 a share at the beginning of the year; its shares are down 40% since February.

The bearish trend for Snap Inc (NYSE:SNAP) shares intensified following its first-quarter results combined with trader’s adverse reaction to the redesign of its app. The massive increase in its capital spending and increasing losses added to the bearish sentiments. Price target cuts and higher valuations also weighed on Snap share price performance in the last couple of months.

Is the Drop in Snap Share Price a Buying Opportunity?

According to several big names in Wall Street, the massive drop in Snap share price doesn’t offer a buying opportunity for investors.

Jim Cramer, for instance, advised investors to avoid investing in Snap despite recent depreciation in its share price. He shows his concerns on higher valuations, widening losses, and higher capital spending, saying “Take a pass — for now — at least until we know whether the Snapchat redesign will hurt them. I think it’s a little bit too risky. I’d prefer to see more panic, more Sturm und Drang.”

The company’s revenues of $230 million in the first quarter missed the consensus estimate by $12 million while its net loss was around $385 million.

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On top of first-quarter revenue miss, analysts’ revenue projections and surveys indicate a notable drop in its second-quarter revenue. Crown analyst John Blackledge says, “The survey of 2.5K US consumers over the age of 18 suggests users spent about 33 minutes/day in the app, down 7% Y/Y in Q2 through the end of May.”

Morgan Stanley, Needham, and Crown have also reduced their price target for Snap shares. The average price target for Snap shares stands around $9, which is well below its current price of $12.

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