Ever since Facebook Inc (NASDAQ:FB) launched Instagram Stories in August 2016, Snap Inc (NYSE:SNAP) has struggled. That is no coincidence. Instagram stole Snap’s thunder and it hurt SNAP stock.

Instagram replicated Snap’s core feature (Stories), and integrated it in a broader photo-sharing app. Because the two platforms compete among the same demographic for engagement, Instagram’s replication efforts came at a big cost to Snap.

Users slowly started migrating their Story posts from Snap to Instagram for two main reasons:

1. Instagram has far greater reach than Snap (500 million daily users versus 178 million for Snap).

2. Instagram offers greater all-in-one convenience (you can message friends, post photos that last forever, and post photos that last only 24 hours all in the same app).

Consequently, things got ugly for Snap in a hurry. User growth slowed. Engagement slowed. Revenue growth slowed. Operating losses widened. SNAP stock dropped.

Now, Snap is redesigning its app in a desperate attempt to fight-back against social media’s Goliath. The redesign is cool (the major changes include separating professional content from friend content and algorithmically ranking posts), but it doesn’t change the depressed narrative for SNAP stock.

Thus, the question becomes: Is SNAP a good buy? No. I don’t think it is a great short here, but I’m also unconvinced that Snapchat deserves a richer valuation than the one at which it currently is trading.

Understanding Snap’s Redesign

If it isn’t broken, don’t fix it.

Snap was broken, so Evan Spiegel and company set out to fix it.

They did a pretty good job. The focus of the app redesign is separating the “social” from “media.” The new Snap app puts all friend content one left swipe away from the camera page, and all professional content one right swipe away from the camera page.

By creating distinct pages for friend content and professional content, Snap hopes to un-blur the lines between the two, fix the “fake news” problem and make content consumption more straight-forward for consumers.

That is really good idea. Putting all my friends’ stuff on one page, and everything else on another page, makes a ton of sense.

The app redesign also includes using “popularity” algorithms to rank your friend list, as opposed to simply listing them in reverse chronological order. Now, the friends you snap the most will be the ones that appear first on the friend page.

That also makes a ton of sense. I care more about seeing my best friend’s Story than anyone else’s Story.

The Redesign Doesn’t Change the Narrative for Snapchat

While these redesigns make the Snapchat app more intuitive, they don’t address the core issues plaguing SNAP stock.

Separating professional content from friend content is smart, but Instagram essentially already does this with the home feed and the explore tab.

Ranking close friends’ Stories first is also smart, but again, Instagram already does this. And because Instagram is pulling engagement activity data from both Facebook and Instagram, Instagram’s ranking algorithm should be a lot smarter.

Moreover, the core issues holding back Snapchat are that Instagram offers greater reach and more convenience. These redesigns don’t address those issues.

Snapchat Stories is still only about 60% the size of Instagram Stories and that size discrepancy is only widening. Meanwhile, Snapchat is still just a place where you post and watch ephemeral content. You can do that on Instagram, alongside posting and watching content that lasts forever.

Bottom Line on SNAP Stock

SNAP stock tends to drop big after earnings reports, rebounds from that post-earnings low, only to drop after the next earnings report. Such is the life-cycle of a cult stock that consistently reports disappointing numbers.

The only way Snapchat breaks out of this loop is if the valuation comes down dramatically or if the numbers get materially better. I don’t think the latter will happen, and the valuation is still a ways away from being reasonable.

Revenue growth at Snap is 60% and slowing. Revenue growth at Facebook is 50% and stable.

Consequently, I think the two companies should trade at a comparable sales multiple. But SNAP stock currently trades at 12.4x next year’s sales estimate. FB stock trades at just 9.5x next year’s sales estimate.

I’m not interested in Snapchat stock until its sales multiple comes down below 10x. Until then, I think this stock is best avoided, even with the app redesign.

As of this writing, Luke Lango was long FB.