Needham initiated coverage on Snap with an underperform rating, citing the competitive threat of rivals copying its innovations.
"We believe SNAP has the most innovative culture on the internet today. The problem is that we believe SNAP shareholders pay in full for its missteps, but don't benefit from the upside of SNAP's genius because competitors can roll out SNAP's best ideas to larger user bases virtually overnight," analyst Laura Martin wrote in a note to clients Monday. "Every time SNAP proves that something works, Google, Instagram, WhatsApp, Facebook and others can copy it."
Snap shares are up 59 percent from its Thursday $17 IPO offering price as of Friday's close.
Martin cited six key reasons for her negative stance: