Lady Gaga once sang she has a hundred million reasons to walk away but needs one good one to stay. This is my sentiment toward Snap (NYSE:SNAP). While I may not have as many reasons as Lady Gaga to dump SNAP stock, the impetus to walk remains the same. However, I won’t for a single factor which I’ll reveal later.

For now, let’s discuss reality. No matter how you look at Snapchat stock, at this moment, it’s a failed investment. On a year-to-date basis, shares are down 19%. Against its closing high of this year, the social media firm has hemorrhaged nearly 43%. What makes this underperformance worse, though, is that among its publicly traded peers, Snap is the least controversial.

Consider Facebook (NASDAQ:FB), which has been embroiled in controversy over the Cambridge Analytica fiasco. The company’s usually lovable CEO Mark Zuckerberg endured harsh criticism like he’s probably never heard before. If the film The Social Network is half true, that’s saying a lot.

In the other corner is Twitter (NYSE:TWTR). Aside from being President Trump’s go-to platform, Twitter has faced a recurring political controversy. The company allegedly censors conservative speech and labels it as hate speech.

Snap has its problems, of course. However, they don’t revolve around such deep-seated, negative emotions. Bullish investors should therefore use this opportunity to load up on SNAP stock. The fact that they won’t tells me something.

Here’s the deal: I’m confident that if you’re looking for a good deal on FB shares, now is an ideal time. The markets punished Facebook because it didn’t quite meet financial and user-growth metrics, and management downgraded forward guidance. But this pessimism overlooked that the company has already won the war.

In contrast, for SNAP stock, the war for relevancy is just beginning.

Social Media Is a Numbers Game, and SNAP Is Losing Numbers

History will show that for its second quarter 2018 report, Snap delivered the goods. Against a forecast earnings-per-share loss of 17 cents, actual losses came in at 14 cents. On paper, that’s a 17.6% positive earnings surprise.

Indeed, the company has enjoyed a string of “strong” earnings reports in prior quarters, catalyzing huge swings in SNAP stock. But this time, it wasn’t enough for the company to pare EPS losses. The markets wanted to see viability in the business model, but instead received disappointing news.

As you probably guessed, I’m referring to Snapchat’s total daily active users (DAUs) count. For Q2, Wall Street forecast 192 million, whereas the social media firm reported only 188 million.

Optimists may point out that mathematically, we’re only talking about a 2% miss. However, I would counter right back and say that SNAP stock, as a younger entity, benefits from the law of small numbers. At this stage of the game, it really shouldn’t miss DAU targets.

Even worse, in Q2 2017, DAUs hit 191 million. Therefore, Snap is inexplicably losing users, which is a death sentence. I don’t care how you want to slice it, social media is a numbers game. The critical loss here justifies the negativity toward SNAP stock.

Look at it this way, if the company hit the Street’s DAU target, it would only represent 0.5% growth year-over-year.

This ugly situation also signals to me that the company isn’t winning the demographic battle, either. As you know, Snap has always catered to youth. But due to life’s cruelty, the young don’t stay that way indefinitely. I’ve previously argued that when Snapchat users get older, they migrate to the mature and more utilitarian Facebook.

Q2 may have proven my point.

Don’t Short SNAP Stock

In any other circumstance, I’d consider shorting Snapchat stock. The underlying company lost volume in a volume-centric business. It may also be losing its grip on its key user base. That would be two death sentences on one criminal.

But before going completely negative on SNAP stock, I urge you to read our own Larry Ramer’s analysis. Specifically, he mentions the company as a buyout target. Ramer writes:

“And finally, even in the unlikely event that Snapchat’s user metrics continue to erode and its revenue growth radically slows, someone (think Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), Verizon (NYSE:VZ) or AT&T (NYSE:T)), will pay a hefty premium on Snap stock to acquire the company. That personalized data and ad revenue are simply worth too much for giant companies to pass up.”

I can’t come up with a good counterargument, other than to say that gambling on a potential acquisition is risky. Still, Ramer makes an excellent point. Someone will pay a fine premium, so it’s best that investors don’t short SNAP stock at this price point.

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