Snap Inc, parent of Snapchat, reported earnings after the bell on August 10th. Snap missed on the top line, EPS and growth. Shares have taken a nosedive since the company went public in March, dropping ~45%.

Meanwhile, Facebook continues to dominate the space in terms of growth and in terms of its superior native ad network. This aside, Snap is confronted by two other mounting problems that also threaten to plummet its already battered stock price.

First, despite the fact that the employee lockup expired on July 29th, 2017, a large cohort of insiders, including employees, were unable to sell any stock due to the fact that Snap was reporting earnings only a few weeks later on August 10th.

This rule is intended to protect against insider trading. These employees will be able to sell their public stock for the first time a few days after earnings are reported. With its less than lackluster entrance into the public market, one can safely assume that many employees will choose to secure some cash from these lofty stock options.

Second, an even more of a pressing potential problem on Snap's horizon, relates to how it opted to structure its IPO. As Jim Cramer's TheStreet recently reported, Snap's bold and rare decision to issue exclusively non-voting shares as part of its public offering could act as another blow to the stock price.

MSCI Inc, best known for its indices, is currently undertaking a review and deciding whether to permit stocks with non-voting shares to be included in its indices (which would potentially mean Snap wouldn't be eligible to be included in any of its Index funds). The S&P Dow Jones Indices already rejected Snap from its funds.

For Snap, most of the control of the company is retained by co-founders Evan Spiegel and Robert Murphy, leaving room for a marginal voice for outside investors. This decision was likely made as an attempt to hedge against the growing trend of activist investors who are known for forcing accountability by purchasing significant portions of companies that fail to maximize shareholder value and force change through public pressure, voting rights and board oversight.

Activists' main objectives are to drive up the share price, ensure corporate governance viable and increase executive accountability. Proxy battles, especially in the context of rookie management, can be highly educational, entertaining, and profitable.

There is also a lot of controversy around activism, usually related to nominating an outsider to dictate the company's path. This explains why Snap tried to avoid future confrontation, yet underestimated the negative sentiment it would leave with institutional investors that wish to retain traditional public equity rights.

But it is not all doom and gloom for this social media-turned camera company. Even though Snap missed its estimates, there's still substantial growth amongst the company's most lucrative demographics, 4MM new North American Millennials, to be exact. Snap has also made a number of improvements to its advertising offering, now allowing marketers to buy through self-serve, a strategy more in-line with likes of Facebook and Google.

The future of advertising is going to be consumed on a 6 inch(ish) device, not a 60 inch screen. Snap is poised to grab sizable market share in this arena. Not all marketers and media buyers have jumped on the disappearing ad train, despite the fact that it most closely resembles once favorite television ads. A substantial portion of budgets are still squandered on digital desktop display, even though most of you are reading this, and pretty much everything else, on your phones.