The numbers around Snapchat’s valuation “do not add up,” according to an analyst note from Cantor Fitzgerald sent on Wednesday.

“The valuation looks stretched to us both based on the future cash flows of the business and when compared to peers like Facebook and Google at IPO,” wrote three analysts from the bank, Youssef Squali, Kip Paulson, and Naved Khan.

The three analysts estimated Snapchat parent Snap’s 2017 revenue to determine its enterprise-value-to-revenue multiple, and compared it to larger rivals Facebook, Twitter, Google, and Yelp.

The enterprise-value-to-revenue multiple is one metric for analysts to decide whether stock is over- or underpriced.

According to the analysts: “Snap Inc. trades at 28.6 x EV/revenue using our [full year 2017] estimates … vs. the average of the peer group (FB, TWTR, GOOGL and YELP) of 5.5 x (and 9.6 x for FB).”

The reading here is that Snap’s stock is overpriced. Facebook made $27 billion (£22.1 billion) from advertising in 2016, according to its financials. Google’s parent company, Alphabet, reported $90 billion (£73.7 billion) in revenue over the same period. Meanwhile, the analysts predicted that Snap would make $1 billion (£819 million) in revenue next year, describing this as “aggressive.”

This is how fast Snap’s revenue might grow

Cantor Fitzgerald Snap Inc chart

Foto: source Cantor Fitzgerald

The bank gave Snap the equivalent of a “sell” rating, citing its inflated valuation, an unproven advertising model, an “untested” management team, slowing growth, and the threat from Instagram and Facebook Messenger.

The analysts said the “jury is still out” on whether Snap would be the next Facebook or Twitter.

“[It] is yet unclear if user/[daily active user] growth will plot the course of a Facebook or tap out sooner with a more niche audience, like Twitter. Monetization growth can only take a company so far (as we’ve seen with Twitter), after which the size of the audience and increased user engagement become much more important revenue drivers longer term.”

Snapchat’s user growth slowed by more than 5% in the first half of 2016, the analysts said.

They blamed the slowdown on “competitive pressures” from Instagram, which launched the Snapchat-like Instagram Stories feature in that time. Facebook has more recently replicated the feature again on Messenger with Messenger Day. If the slowdown continues, the analysts wrote, Snapchat will look more like Twitter.

Finally, there’s the fact that almost 1 billion shares will flood the market next summer, likely denting Snap’s share price. The analysts said around 957 million shares would come onto the market after the expiration of Snap’s lock-up period next July 29. Facebook’s share price fell 4% the day after its lock-up period expired.