As my readers will surely attest, I’m not the biggest fan of Snap Inc (NYSE:SNAP); in fact, I’ll admit that I can be quite testy with SNAP stock as a viable investment prospect.

I fail to see how an upstart company can upend Facebook Inc (NASDAQ:FB), or even Twitter Inc (NYSE:TWTR), simply because they have a unique twist on the social media angle.

For the most part, I’ve been right to warn investors and speculators about getting too deeply involved with Snapchat stock. Perhaps as a trade, the volatility that we’ve seen since its initial public offering provides the movements necessary for profitability.

The problem, of course, is that most folks don’t have time to sit around and react to daily share-price gyrations.

The other major dilemma for SNAP stock is it has been a consistent loser. For this year, shares are down almost 47%. In comparison, social-media king Facebook is up nearly 56%. Even long-embattled Twitter is in the black by a very healthy 27%.

However, recent technical developments suggest a possible turnaround in Snapchat stock is in play. When shares first fell to $17 (the company’s IPO price) it was critical for the bulls to hold the line.

They failed, and SNAP quickly fell to the low-teens, eventually closing below $12 on August 11. But this was the first and so far, the only time when shares did so.

Against that dubious milestone, SNAP stock stormed back, attempting to break past $17. It got close around mid-October. Unfortunately, a terrible third-quarter earnings report did them in.

The optimists, though, had something to cheer about: Snapchat stock did not break below $12. Evidently charting a series of higher lows, is SNAP a good buy at this juncture?

SNAP Stock Suffers from Poor User Engagement

Generally speaking, it’s better to be an optimist than a pessimist. No one wants to hang out with a person that always sees the bad in everything. That being said, blind optimism can get you in big trouble in the markets.

As I’ve pointed out in previous articles about SNAP stock, the social-media firm has a demographic problem. It caters to young adults, but primarily, younger Millennials and the Gen-Z crowd. You’re not going to see too many older Millennials, and certainly not members of Gen-X, use Snapchat.

The writing was on the wall with SNAP’s Q3 earnings report. Heading into earnings, the gap between its 300 million-plus monthly active users (MAUs) and its daily active users (DAUs) was sizable.

In August of this year, DAUs totaled 173 million. In the latest Q3, the company upped that figure to a disappointing 178 million.

Wall Street analysts expected 181.8 million DAUs, but that wasn’t the only reason why Snapchat stock plummeted. Rather, the gap between DAUs and MAUs, now approximately 41%, confirms Snapchat’s transitory nature.

In order for the company to survive under Facebook’s shadow, it has to prove that it has a “committed” user base. Instead, the DAU-MAU gap demonstrates that more people use Snapchat occasionally for kicks and giggles, but not much else.

Even Facebook’s mobile DAUs (1.15 billion) have a 44% gap with its 2.07 billion MAUs. Overall, FB has 1.37 billion DAUs, or a 34% gap against its MAUs. The reason for Facebook’s superior statistics are obvious.

People use the platform as a daily channel to stay plugged in to a wide variety of social and professional functions. In contrast, most people seemingly use Snapchat to goof off.

Snapchat Stock Is an Unfortunately Emotional Investment

Don’t get me wrong: everybody needs an outlet for stress and all the junk that goes on in life. I understand. Snapchat provides that platform for many young adults and teenagers. What I don’t understand is the valuation for SNAP stock.

I think Snapchat stock, like many hot names on Wall Street, suffers from emotional exuberance. People love the product or service that a publicly-traded company offers. They then conflate that passion to market performance. Unfortunately, that’s not how things work.

As President Trump might say, “it’s nothing personal…it’s just business.” And business does not look good for SNAP, especially if it cannot gain more consistent user engagement. Someone has to turn on the lights at the company and that means advertiser dollars.

This is the double-whammy against SNAP stock. It just doesn’t have the traffic or engagement that advertisers are looking for. On top of that, Snapchat caters to the young, which has less buying power than older demographics.

The platform itself is a great idea; unfortunately, great ideas alone don’t pay the bills.

As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.