** Snap's shares (N:SNAP) down 2.4 pct at $16.58 premarket after lead underwriter Morgan Stanley (NYSE:MS) downgrades the stock, a little more than 4 months after its debut
** MS cuts to "equal-weight" from "overweight", slashes PT by $12 to $16; Below median PT of $19.50
** Snapchat's ad platform not improving/evolving as quickly as expected, and competition from Instagram is rising - MS
** Brokerage also cuts annual revenue estimate for SNAP by 7 pct to $897 mln and daily active user estimate by 2 pct to 182 mln
** MS says advertisers are struggling to create SNAP ads with adequate completion rates, while app download declines have accelerated
** "We have been wrong about SNAP's ability to innovate and improve its ad product this year" - MS analyst Brian Nowak
** FIS Astec Analytics data shows weighted average borrowing cost to short stock at 64.73 pct, at high end of range
** Borrowing activity rating is at its maximum of 10, indicating shares are scarce and expensive to borrow
** 12 of 36 brokerages rate the stock "buy" or higher, 17 "hold" and 7 "sell" or lower
** On Monday, SNAP closed below its IPO price for first time since its debut in March
** Up to Monday's close, SNAP has lost about 42 pct from its early highs after its IPO
** SNAP IPO lock-up period set to expire on July 29
** SNAP graphic: (http://tmsnrt.rs/2nnB1L2)