Snap's challenges are mounting as a growing number of rivals attack its core business — and Wall Street is beginning to take it seriously.
Stock analysts who cover the company now see Snap posting wider losses for this year and next than they expected three months ago, the latest data from Yahoo Finance shows.
Most recently, JPMorgan cut its 2017 price target on Snap to $18 from $20 on Monday.
What's more, the company's shares slid in last week — even as the broader market for tech stocks rose — after an influential
If Snap can't innovate fast enough to stay ahead of Facebook and other much-larger rivals, the company may find itself trying to generate growth out of an ever-smaller slice of the digital ad pie.
Taken together, the latest news on the company suggests that investors who are betting on Snap shares will see more of the bumpy ride that's followed its early March IPO.
The shares, which closed Friday at just over $21 a share, have traded as high as $29.44 and as low as $17.59. It was at $20.68 on Monday morning.
The risks in owning Snap shares aren't news to anyone who read it's pre-IPO financial documents.
The owner of Snapchat has never come close to making a profit and said plainly that it "may never achieve or maintain profitability." The stock will also be under more pressure this summer as the lockup on roughly three-quarters of its shares expires in late July.
Wider losses seen for this year and 2018
But a look at the average estimate of analysts shows that Wall Street is expecting even deeper losses now than at the time of Snap's IPO.
As of late Friday, the company was expected to lose 57 cents a share this year, a much wider than the loss of 44 cents expected in early March, and worse than the 51 cent loss seen just 30 days ago.
The trend is the same for Snap's 2018 losses, which are now forecast at 34 cents a share, or about a third wider than the 26 cents projected three months ago.
And those numbers exclude the costs of stock-based compensation, which continue to be significant at the company.
In the first quarter, for example, those charges were $2 billion, or 13 times revenue of $150 million, driven higher by the company's IPO.
The bad news in Mary Meeker's annual internet trends report
Meanwhile, Snap shares have been slipping even while the Nasdaq composite index climbed to new highs.
The drop came after Mary Meeker, the former Wall Street analyst who now tracks the web for the marquee venture capital firm Kleiner Perkins, released her annual
According to Meeker, Facebook and Alphabet's Google captured 85 percent of the growth in online ad revenue last year. That suggests online advertising is fast becoming a duopoly that will leave little room for smaller rivals like Snap.
Snapchat is seen capturing less than 1 percent of online ad revenue this year, according to the research firm eMarketer.
And the shift to mobile video ads that Facebook and Google are dominating is attracting other rivals.
Add Microsoft to the list of companies aping Snapchat features
Last Thursday, Microsoft's Skype unit rolled out new features meant to bolster its image as a fun place for people to hang out together online.
Skype's include a tool for sharing videos that
Those kinds of tools have proven so popular with Snapchat users that Facebook aped them earlier this year and made them available to users of its Instagram service.
In April, Facebook said Instagram's stories feature had 200 million users — more than Snapchat's total user base of 166 million.
That push dented Snap's user growth in the first quarter, prompting investors to sell off its shares by more than 20 percent in one day.
Still, the shares bounced back after several large hedge funds said they were buyers of the stock.
And Snap hasn't been standing still.
It said this week it began shipping its Spectacles glasses to Europe. That product can be used to take pictures and view digital elements superimposed upon real-life scenes, a function called augmented reality or AR.
The glasses have yet to contribute meaningfully to Snap's revenue.
If Snap wants to keep boosting its number of users and ad revenue, it likely will need more innovation to stay ahead of a growing list of competitors — which now includes Microsoft.
Otherwise, Snapchat may find itself encircled by other, larger predators on the hunt for the same game.
Disclosure: NBC Universal, the parent company of CNBC, is an investor in Snap.