Snap judgment: Why Wall Street has doubts about Snap Inc.

The March 2 debut on the New York Stock Exchange was picture perfect: Shares in Snap Inc., the maker of the popular photo-messaging app Snapchat, soared by 44 per cent.

But two weeks later, the stock has lost its post-IPO glow. Some Wall Street analysts are now wonderingwhether Snap has truestaying power, or whether it will prove just as fleeting as the disappearing messages at the core of its app.

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Shares in Snapwere priced at $17 US before the IPO, but started tradingat more than $24 once stock markets opened on March 2. At market close on Friday, Snap shares were worth $19.54.

Of 11 analysts who cover the stock, according to Bloomberg, six have negative ratings on Snap and the rest are neutral. Reports from those analysts show why they're so ambivalent about the stock.

What it will take to make Snap a winner

Snap stock is "like a lottery ticket," wrote Needham& Company analyst Laura Martin in her analysis. For that ticket to be a winner, Snap's advertising strategy will have to take off.

Snap's core user demographic, aged 13 to 34, is "an advertiser's dream," wrote Martin. Those young users are also highly engaged with the Snapchat app, partly due to the temporary nature of content shared by their friends.

Disappearing messages and storiescreate "a sense of urgency for users to check the app more often," noted a report from research firm Trefis. That means lots of advertising opportunities.

"The average Snapchat user opens the app eight times a day and spends as much as 25 minutes on the app," said the Trefis report. A survey of Snapchat users by Mizuho Securities found that 79 per cent of respondents used the app more than twice a day, and 21 per cent used it more than 15 times a day.

Advertisers are paying attention. According to research from Shebly Seyrafiwith FBN Securities, advertisers "intend to dramatically increase their spend on Snap in the near future."

The big risk to Snap's business model

Advertisers may be calling, but for now Snap still isn't turning a profit.

If the company wants to build advertising revenue, it has to prove that it can get more and more people using theSnapchatapp. Those users also have to engage within-app ads, which might not appeal to young users.

"Snap mainly targets large brand advertisers, and these ads and products may or may not necessarily resonate with users," wrote Neil Doshi of Mizuho Securities."Furthermore, most agencies and advertisers we spoke with still consider Snapchat an 'experimental' buy, and not a core ad platform."

Young users [Snap's core audience] are often fickle and faddish.- Laura Martin, Needham & Co.

The growth in Snapchat's daily average users "is weak in most major developed countries" like Canada, the U.S., the U.K., and Japan, wrote analyst Victor Anthony with Aegis Capital.

If Snap can't build a larger user base, wrote Anthony, "advertisers will likely seek out alternative platforms where growth remains robust, such as Instagram, which benefits from Facebook's targeting abilities."

Facebook-owned Instagramhas chased afterSnapchat's lead with a"stories" feature, allowing users to create short digital narratives and share them with friends.

Some analysts expect Snapchat'syouthful product will have a tough time attracting an older crowd. In his report, Seyrafidoubts the extent to which older users "will embrace the whimsical (some would say silly) product offerings that Snap provides."

What if someone acquires Snap?

Investors in Snap stock could potentially enjoy a windfall if the company gets bought out, depending on the price of such an acquisition. Facebook tried to buy Snap in 2013, offering $3 billion only to be spurned by Snap CEO Evan Spiegel.

"There are very few people in the world who get to build a business like this," Spiegeltold Forbes Magazine about his decision. "I think trading that for some short-term gain isn't very interesting."

Seyrafithinks Facebook could try again, and offer more than $20 billion this time.

"Remember that FB paid $21.8B for WhatsApp, a company which, although it had more users than Snap, was not generating any real revenue," wrote Seyrafi.

But Spiegel and his chief technology officer, Robert Murphy, still control the vast majority of voting shares in Snap. The company'sdual-class stockstructure ensures they would have the final say in any sale.

Seyrafi noted another potential suitor for Snap: U.S. communications giant Comcast, whose NBCUniversaldivision struck its own deal with Snap to buy about 15 per cent of Snap shares for about $500 million US during the IPO.

In the meantime, Snap has to keep its mercurial young users coming back for more, and that's no easy task.

"Young users (Snap's core audience) are often fickle and faddish," wrote Laura Martin of Needham & Co."If they desert Snap for a new app in three years, it is unclear what Snap will be worth."