According to Piper Sandler, two falling internet stocks could be the cause of a protracted struggle with the digital ad market. Analyst Thomas Champion downgraded Snap and Pinterest to neutral due to being overweight, saying that ad-dependent stocks are not great recovery candidates for investors. Champion writes: “After a strong two-year stretch, digital ad spend appears to be normalizing. Teams multiples have fallen and are down ~40% from recent highs, but history gives see multiples may not be recalculated until ad spend growth bottoms out,” Champion wrote. Those two stocks were priced back on a wild note last month, after Snap cut its guidance for the second quarter. The company said in a securities filing that “the macroeconomic environment has deteriorated faster and faster than anticipated.” Snap was down 43% in the trading session following the announcement, while Pinterest was down more than 23%. Champion says that Piper Sandler’s research supports the concern signaled by Snap. “Last week’s advance notice showed worsening. Our tests showed spending slowing in SNAP’s two largest verticals (Media & Entertainment and Apparel),” wrote Champion. Piper Sandler reduced her price target for Snap to $18/share from $30. The new target is about 29% higher than the stock closed Wednesday. Meanwhile, Pinterest may be lagging behind its peers in a slowing growth industry, according to Piper Sandler. Champion writes: “PINS tests are still mixed on reasons of (1) challenged audience growth and (2) lack of new ad formats. Engagement concerns may persist at a time when PINS competes with older video-first platforms”. For Pinterest, Piper Sandler cut her price target from $35 to $23 per share. That sent the stock up 21.5%. – Michael Bloom of CNBC contributed to this report.