Social media giant Snap (SNAP) stunned market watchers on Tuesday after announcing financial results that weren’t at dismal as Wall Street had expected.

After a tumultuous year, the number of daily active users stabilized and held steady from the previous quarter at 186 million. Investors have suddenly started to feel hopeful that the struggling social media company has turned a corner, but legendary tech investor Roger McNamee doesn’t think it’s that simple for Snap.

“I wish there was a better long-term outlook. I’d like to see a lot more competition in the tech space than we have right now,” McNamee told Yahoo Finance. “But they’re up against a foe which outscales them by so much. I just don’t think they have a prayer long term.”

McNamee is the co-founder of Elevation Partners and was an early investor in Facebook (FB). He argued that while Q4 wasn’t as bad as anticipated, Snap’s inability to retain talented executives will plague the company.

“The inability to hire and retain a management team that’s cohesive and can actually stay focused, I think they just make it that much more difficult,” McNamee said. “My observation is it’s going to be really hard for them to hire and retain a great management team if the upside is that we’re going to do a little better monetization of a business that’s not going to grow.”

Snap has had 10 executives depart the company over the past year or so. Most recently, Chief Financial Officer Tim Stone announced that he would be leaving the company after under a year on the job. Chief Accounting Officer Laura Sweet has been serving as interim CFO until a permanent replacement is found.

In addition, Snap is facing tough competition from its biggest rival: Facebook-owned Instagram. CEO Mark Zuckerberg announced on the company’s earnings conference call last week that Instagram Stories now has 500 million daily active users.

“There’s nothing to keep Facebook from making Instagram completely smother Snap. I can’t concoct a scenario that gets me excited for the long term,” McNamee said.

“I can’t imagine a worse competitive situation than the one they face against Instagram. It’s brutal. They’ve got no friends, and they’ve got the worst enemy you can pick.”

Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

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