Shares of Snap Inc. fell 7% in volatile morning trade Monday, following another bearish initiation on Wall Street from an analyst who thinks the stock is overvalued. Needham analyst Laura Martin initiated coverage on the stock with an underperform rating, which is the equivalent to sell, and a fair value price target range of $19 to $23 a share, indicating declines from recent trading prices. The stock closed at $27.09 on Friday after pricing in its market debut at $17 on Thursday. It traded down around $25.28 on Monday. Martin referred to Snap as a "lottery-like stock," saying that on first look it may look like a good buy but that close scrutiny of Snap's fundamentals uncover a number of risks, such as a total addressable market that is 80% smaller than Facebook Inc.'s , a social media rival whose Instagram Stories mirror a similar service offered by Snapchat, and a revenue forecast issued by Snap that Martin believes may be difficult to meet. This adds to a number of other bearish initiations that have hit Snap since its Thursday IPO. The average rating on the stock among a poll of six analysts surveyed by FactSet is the equivalent to sell, while the average price target is $16.50, below Snap's IPO price.
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