This week’s Danger Zone pick is down 35% year-to-date, and that’s not enough. Since our original report, the stock has outperformed as a short by 204%, falling 79% while the S&P 500 is up 126%.

We still think the company’s fundamentals cannot come close to justifying the expectations baked into its lower stock price. We show the math.

We’re back to warn investors: don’t catch this falling knife.

Below, we provide an excerpt from our latest Danger Zone report to show how our research helps you see danger before it crushes your portfolio. Get the full report a la carte here.

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This stock could fall further based on:

  • declining user base in key markets,
  • stagnant revenue per user,
  • negative margins and large cash burn,
  • competitive disadvantages vs. much larger and profitable peers, and
  • a stock valuation that implies the company will grow users nearly 4x current levels.

Problems Lurk Beneath the Headlines

There are two main ways this company can grow its business, given that 80% of its revenue comes from advertising:

  1. grow users, measured by daily average users (DAUs), or
  2. grow revenue per user, measured by average revenue per user (ARPU).

The company needs to dramatically accelerate each simultaneously to meet the expectations baked into its current stock price. In the meantime, the numbers are moving in the opposite direction.

DAU Growth In Decline In the Only Profitable Markets

The company’s user growth peaked in 2021 and has slowed across all regions since.

In 2Q21, the company grew total DAUs 23% YoY. Broken down by region, the company grew DAUs 6%, 10%, and 56% in North America, Europe, and the Rest of the World YoY, respectively in 2Q21.

In 2Q26, the company’s DAUs fell 6% YoY in North America, fell 2% YoY in Europe, and grew 12% YoY in the Rest of the World, respectively.

DAUs have now fallen YoY in North America in six straight quarters and eight of the last nine quarters. In Europe, DAUs have fallen YoY in three consecutive quarters. See Figure 2.

Figure 2: YoY DAU Growth by Region: 1Q20 Through 2Q26

Sources: New Constructs, LLC and company filings

Billions in Cash, Gone Forever

From 2016 through 2Q26, the company burned through a cumulative $13.7 billion (115% of enterprise value) in free cash flow (FCF) excluding acquisitions. See Figure 7.

The company’s cash balance is large enough to keep it off our Zombie Stocks List, but should the FCF burn accelerate, the situation could change quickly. In the first six months of 2026, the company burned $395 million in FCF excluding acquisitions.

Figure 7: Cumulative FCF Excluding Acquisitions: 2016 Through 2Q26

Sources: New Constructs, LLC and company filings

…there’s much more in the full report. You can buy the report a la carte here.

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