Pivotal Research’s Brian Wieser braved the storm today and issued the first “Sell” research on Snap Inc.

Snap is a promising early stage company with significant opportunity ahead of itself.

Unfortunately, it is significantly overvalued given the likely scale of its long-term opportunity and the risks associated with executing against that opportunity. Significant ongoing dilution from share-based compensation will likely represent an additional negative consideration for the stock. We value Snap at $10 per share on a YE2017 basis. As the stock priced well above this level in its IPO, we rate its shares Sell.

Snap presents investors with the opportunity to invest in the company behind an innovative, large-scale, and distinctively young-skewing platform which is establishing itself as a magnet for business unit talent and content partners alike. Snap also offers investors a share of the significant economic potential that should follow from Snap’s ongoing business expansion.

At the same time, there are significant risks offsetting these opportunities. Investors in Snap will be exposed to an upstart facing aggressive competition from much larger companies, with a core user base that is not growing by much and which is only relatively elusive. It has a promising and innovative advertising offering, but so far it is still mostly unproven and difficult to quantify its ultimate scale. Investors will also be exposed to what appears to be a sub-optimal corporate structure operated by a senior management team lacking experience transforming a successful new product into a successful company. High expenses and cash costs to run the company are negative as well. And then there are other negatives for shareholders given the degree to which they will be diluted through aggressive share issuances to employees and through the lack of voting rights that they will possess.

While we consider ourselves cautious optimists on the business itself, our model feels potentially “stretched” in even getting to $10 per share, or a $16bn valuation on a YE2017 basis. As the stock priced well above this level in its IPO, we rate its shares Sell.