I really don’t know what Snap Inc (NYSE:SNAP) investors were expecting from Q3 earnings on Tuesday. SNAP stock fell 17% in after-hours trading after missing estimates for revenue and daily active users.

But the obvious question is whether the problem is the performance — or those estimates. I wrote ahead of the report that SNAP earnings looked like a trap. Truthfully, that advice wasn’t based on any proprietary algorithm or hidden knowledge. Rather, it was based on simply looking at the multiquarter trend for Snap Inc users and revenue. Growth in both numbers was decelerating.

The narrative coming out of the earnings is that Snap Inc disappointed again. “Is SNAP a good buy?” is a question that shouldn’t even be considered. A Bloomberg columnist wrote after earnings that “the company is a disaster.”

It’s the same narrative that has plagued Snap since not long after its IPO, likely the most anticipated since that of Facebook Inc (NASDAQ:FB) over five years earlier.

But I’m not convinced the problem is Snap, at least not entirely. The crux of the problem is that investors and analysts keep expecting the company to be something that it’s not — and are valuing SNAP stock accordingly. I made the same argument after Snap’s Q1 earnings six months ago — and here we are again. Snapchat is not a bad company, and it’s not a disaster. But even after a huge decline, SNAP remains a sharply overvalued stock.

SNAP Stock Earnings

Looking at Street estimates, it’s clear why the quarter seems like a disappointment. Revenue came in at $207.9 million. Consensus was $236.9 million — meaning SNAP’s actual top-line was over 12% lower than expected. That’s a huge miss. Daily active users were 178 million, against FactSet estimates of 181.8 million: user growth was roughly half of that modeled.

Profits actually were better than expected: adjusted EPS of -14 cents was a penny better than the Street projected, and an Adjusted EBITDA loss of $179 million was narrower than consensus of $194 million.

But profits aren’t necessarily that important at this point. Snap still is investing in building out its business, and still learning how to monetize its users. The focus here is on user growth and per-user revenue growth. And so it’s worth looking at those numbers without the context of analyst expectations.

For the third quarter, revenue increased 62%. Daily active users rose 17% year-over-year, with Snapchat adding over 25 million DAUs in the last year. (Remember, too: DAUs have gone from zero at launch in September 2011 to the current 178 million. That’s impressive, no?)

ARPU (average revenue per user) increased 39% year-over-year to $1.17. Clearly, Snapchat is making some progress in ad sales and other monetization efforts. In fact, ARPU has almost quadrupled in seven quarters: the Q4 2015 figure was just $0.31, according to the S-1 filing ahead of the IPO.

None of this is to say that SNAP stock shouldn’t have fallen after earnings. It should have. But the decline is coming not because Snap isn’t growing. It’s because it isn’t growing as fast as investors and analysts thought it would.

SNAP Expectations

At this point, whose fault is that? It was clear from multiple reports that Snapchat was struggling with advertising demand during the quarter, as I wrote ahead of earnings. As far as users go, the Q3 number shouldn’t be a surprise. Actually, it’s right on trend. Quarter-over-quarter, Snapchat DAUs increased 5% in Q4, 5% in Q1, 4% in Q2, and now 3% in Q3. Why was the Street looking for 6%-plus?

The post-earnings decline in Snapchat stock (that’s not what it’s called — but that’s basically what it is) came simply because Snap did what it did in Q2. And Q1. And Q4. The problem isn’t just Snap’s growth. It’s that the market is expecting that growth to accelerate — despite all evidence to the contrary.

Is SNAP A Good Buy? No.

The issue for SNAP stock right now is that those expectations still haven’t come down enough, particularly given concerning commentary on the post-earnings conference call. SNAP still trades at around 14x 2017 revenue — a multiple roughly similar to that of Shopify Inc (US) (NYSE:SHOP) who grew faster than Snap Inc in its Q3 and just turned profitable on a GAAP basis.

And Snapchat’s near-term plans seem to suggest that management isn’t expecting the acceleration investors have been awaiting. The company is redesigning its platform in a bid to broaden its demographics – a move that could turn away current users and shows that Snap Inc sees a ceiling on the current platform. A shift to auction-based pricing for its ads has sent prices falling, hitting ARPU and pressuring revenue growth going forward.

Investors need to understand that Snapchat’s growth trajectory is not what SNAP stock bulls expected. In fact, it’s likely not going to be close. This is not the next Facebook, or a real competitor to Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) in the online advertising space. At best, it’s a niche platform like Twitter Inc (NYSE:TWTR), a company now worth more than Snap Inc. But Snapchat still is years away from generating even Twitter’s modest profitability — and the value of time matters.

This is not a terrible company. It’s simply not the company that investors thought it was. Its growth isn’t as fast, its appeal isn’t as broad, and its advertising potential may not be nearly as great. The market needs to readjust its expectations dramatically. The problem for SNAP stock is that when that happens, it will decline just as dramatically.

As of this writing, Vince Martin has no positions in any securities mentioned.