The troubles facing Snap (NYSE:SNAP) and SNAP stock continue to increase. The company has failed to develop successful products aside from its core Snapchat app. In 2018, its financial losses mounted, many of its executives departed, and fewer users logged on to Snapchat.

As a result, SNAP stock is now flirting with penny-stock status. These circumstances, along with the severity of SNAP’s financial situation and its declining competitive prospects, make Snap stock neither a good stock to buy nor a good one to short.

On Dec. 20, SNAP stock closed below $5 per share for the first time. Though the shares subsequently recovered a bit, the previous dip became the latest sign that Snapchat’s disappearing pictures have become a metaphor for the value of its stock.

The outlook of SNAP stock appears to be ugly on nearly all pertinent fronts. The site never gained a serious following beyond its core teen audience. Unlike Twitter (NYSE:TWTR), it did not build a niche that Facebook (NASDAQ:FB) cannot take over. Now even Facebook’s Instagram has more daily active users than Snapchat.

 SNAP Stock Has Been Hurt by Management’s Missteps

For all of the news about executives departing SNAP, one could argue that the most troublesome executive may be CEO and co-founder Evan Spiegel himself. Spiegel and the company’s other founder, Robert Murphy, deserve credit for creating a platform that still attracts about 186 million DAUs. Sadly for shareholders, their business management skills are not as impressive as their creative talents.

Spiegel passed up the chance to sell Snapchat to Facebook for $3 billion in 2013. Admittedly, Facebook’s offer was well under SNAP’s current market cap of about $7 billion. However, given the direction of the equity, one has to wonder how long SNAP stock’s valuation will stay above that original offer.

We also found out that former CFO Drew Vollero reportedly left the company because he believed that Snap had spent too much money on the development of Spectacles, which have not sold well.

Spiegel has not abandoned an unpopular platform redesign despite poor reviews from key customers. Since the release of the latest version of Snapchat in February, DAUs peaked at 191 million and have fallen every quarter.

These metrics undoubtedly indicate that Snap and SNAP stock will face more trouble in the future. The company did not award bonuses to its employees for the second year in a row, indicating that it fell short of its rumored goal of breaking even in the fourth quarter.

SNAP Stock Is Just As Challenged As Snap, Inc.

SNAP stock has fallen nearly 75% from its 52-week high. Although SNAP is looking to break even this quarter, analysts, on average, predict that it will report annual losses through at least 2021.

Still, even with its lack of positive catalysts, it will remain difficult to make a profit by shorting SNAP stock. The stocks of troubled companies can rally for long periods of time.

Moreover, SNAP held over $1.4 billion in cash as of the end of the third quarter. Although SNAP’s free cash flow for the first nine months of 2018 came in at an appalling -$664 million, the company can keep its doors open long enough to give bullish investors some hope. So rather than advising investors to short Snapchat stock, I’m encouraging them to simply stay away from it.

Final Thoughts on SNAP Stock

Put simply, SNAP stock has become a name that investors should avoid and ignore. Spiegel’s unwillingness to listen to executives or customers is a sufficient reason to sell the stock. That, along with Snap’s declining user base and mounting losses, has already sent SNAP stock price to the $5 per share range.

The company’s remaining cash hoard gives Snap enough time to make its demise uncertain and prevents SNAP from being a prime short-selling candidate. However, Snapchat stock appears poised to eventually disappear like a Snapchat picture.

As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting.