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Snap shares drop on downgrade by lead underwriter Morgan Stanley

FILE PHOTO - A man takes a photograph of the front of the New York Stock Exchange (NYSE) with a Snap Inc. logo hung on the front of it shortly before the company's IPO in New York, U.S., March 2, 2017.

REUTERS/Lucas Jackson

Snap Inc shares tumbled on Tuesday after Morgan Stanley, the lead underwriter on the company's initial public offering, downgraded the stock and raised concerns about the social media company's ability to compete with Facebook Inc's Instagram.

The ratings move, a rarity by a lead underwriter so soon after a listing, came four months after the Snapchat owner's public debut, which was the hottest for a U.S. technology company in years.

Snap shares have tumbled some 45 percent from a high hit shortly after their debut and slipped under their $17 IPO price for the first time on Monday.

They were last at $16.12, down 5.1 percent on the day, after falling as low as $15.84.

Morgan Stanley cut its rating to "equal-weight" from "outperform" and slashed its...