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Snapchat Parent Working on IPO That Could Value Company at $25B or More
- troncheadle 10y agoRelated question -- How do I choose a mutual fund / 401k / pension / etc that is guaranteed never to take part in these insane silicon valley IPOs?
- AndrewKemendo 10y agoYou mean insane silicon valley IPOs like: Apple Google NVIDIA Facebook Intel Netflix LinkedIn Oracle Tesla Sun Twilio Adobe Hewlett Packard AMD Something that gives you the opposite of these returns: http://www.bloomberg.com/quote/BSVX:IND http://www.bloomberg.com/quote/BSVX:IND
- sharkmerry 10y agoIsn't this a selection bias? You're tracking only the successes
- pd1 10y agoI think that's the point, you win some, you lose some, overall you approximate the market
- thearn4 10y agoIf I compare that to a total market index (say, Vanguard's VTI) over a few years, it honestly doesn't look explosive or anything. Why not just invest in the total market (giving no preference for the valley), and be done with it?
- shapov 10y agoReally, who the hell cares about volatility, when it's your retirement at stake /s Really though, [anything that loses half it's market cap](http://www.reuters.com/article/linkedin-results-research-idUSKCN0VE1N0 http://www.reuters.com/article/linkedin-results-research-idU...) in a span of a day should not be in your retirement portfolio, and lets face it, most of these 'growth' oriented startups that go IPO, are susceptible to those losses. EDIT: Just to clarify. When I say growth oriented, I mean the companies that burn through money to get as many users as possible, without a clear monetization strategy(other than, we'll sell ads).
- troncheadle 10y agoEvery company that you listed produces a product other than Ad Space / eyeballs. Even Facebook has diversified to sell something other than ads -- I still probably wouldn't invest, as their continued success relies on such an ephemeral foundation -- millions of people continuing to log on to Facebook every day. Smart money says that when I am 70 years old, people will not be logging into Facebook every day. If they are, great for Facebook! However you would not catch me betting my retirement money on that. Have you ever walked in to Facebook? How the hell are they going to pay all of those engineers when people stop caring about Facebook and the ad money stops flowing? Same goes for Linkedin -- unless they can make a very strong play into the recruiting space I would not bet my retirement money on their continued success. Based on what I know about recruiting I doubt that Linkedin will be able to penetrate -- if you want to be a personnel supplier for a Kaiser or a Chase Bank you need deep personal connections, you need to wine and dine, you need to go golfing. They aren't amenable to the speed dating model the internet encourages. They want a man or woman they can trust who can demonstrate their value transparently. But I digress. Snapchat sells ad space. That, to me, is not a sustainable business model. Ask traditional publishers how that model worked when the took it to the web. Won't work (in the long run) for Snapchat either. I think it's an entirely different class of business than AMD, Sun, Tesla, etc.
- jonknee 10y agoPlenty of companies that sell "real products" or that you can walk into have come into trouble (have you tried walking into a Circuit City lately?). The answer is to have a well diversified portfolio so that you can capture the value of giants like Facebook and still not tie yourself to their long term prospects.
- not_real_name 10y agoSeems to work ok for Google...
- adventured 10y ago> Every company that you listed produces a product other than Ad Space / eyeballs. Even Facebook has diversified to sell something other than ads That's an exaggeration to put it mildly. Facebook is getting nearly all of their $22+ billion in sales from ads. They have practically no revenue diversification. Google is the same. So there's nearly a trillion dollars in market cap courtesy of ads.
- rubidium 10y agoBSVX:IND is pretty similar over the past 5 years to S&P 500 if you compare the two.
- huac 10y agoSimilar returns, higher risk profile = :(
- TylerE 10y agoJust buy an index fund that tracks the S&P or Dow
- williwu 10y agoGet self directed IRA or 401K. Then you can do whatever you want.
- JohnnyConatus 10y agoI have a side-project that makes getting a Solo 401k much easier. If anyones interested, PM me and I'll give you an at-cost price. I just want beta users at the moment. All plans are IRS approved, btw.
- justinlardinois 10y agoCan't tell if this is snark or just really bad advice.
- toomuchtodo 10y agoBuy VOO.
- SteveGregory 10y agoif the IPO is anywhere near the expected 25B, then it will be in the S&P 500, and a component of VOO
- cmpolis 10y agoYou can look at how much exposure you have in aforementioned retirement vehicles and sell short that same amount of exposure in a brokerage account.
- wdr1 10y agoAny bond fund is unlikely to include an IPO. The S&P500 by definition is not going to include any IPOs. Likewise any sector specific fund, such as the REITs and what not.
- MAGZine 10y agoFULL TEXT == Snap Inc. is working on an initial public offering that could value the popular virtual-messaging company at $25 billion or more, in what would be one of the highest-profile debuts in years. The company, formerly known as Snapchat, is preparing the paperwork for an IPO with a view toward selling the shares as early as late March, according to several people familiar with the matter. There’s no guarantee the four-year-old Venice, Calif., company will proceed with a share sale on that time frame or what its valuation might be. If Snap, best known for allowing users to send disappearing messages from their smartphones, moves forward as planned, it would be the biggest company to go public on a U.S. exchange since 2014. That’s when Chinese e-commerce company Alibaba Group Holding Ltd. debuted at a $168 billion valuation. Snap would become the first of a small group of highly valued and closely watched venture-backed companies, led by Uber Technologies Inc., to test the public markets. A level of $25 billion or more would also represent a significant premium to Snap’s most recent valuation, which was pegged at $17.8 billion in its last funding round in May. That would bode well for a new-issue market that until recently suffered from reluctance on the part of public investors to match the private valuations of many Silicon Valley startups. Underpinning Snap’s valuation is the company’s dramatic revenue growth since it first started running advertisements in 2014. The company told investors earlier this year it expected revenue of between $250 million and $350 million in 2016 and as much as $1 billion in 2017. It is already ahead of the top end of its 2016 forecast, according to two people familiar with the matter. In 2015, the company generated just $60 million in revenue. It isn’t clear whether Snap is profitable. Snap primarily makes its money by selling advertisements on Snapchat that are slotted in between stories contributed by media partners and video diaries posted by its 150 million daily active users. Marketers can also purchase location-based or event-based geofilters and “lenses” that add quirky characteristics to photos and video. Snap’s debut would be a boon to a technology-IPO market that has suffered from a severe drought of new offerings. Only 19 tech companies have gone public this year on U.S. exchanges, raising just $3.3 billion, according to Dealogic. The overall IPO market has been weak too largely because of the dearth of tech offerings. Yet a spate of IPOs in September among mostly smaller technology companies indicates the trend may be reversing. Firms that priced below their most recent private funding round have quickly soared above it. U.S.-listed tech companies that debuted this year are now up 65% on average as of Wednesday’s close, according to Dealogic. Nutanix Inc., a software company that had been valued at $2 billion privately, priced its IPO at a valuation of $2.2 billion last week. After more than doubling its IPO price in several days of trading, Nutanix’s valuation is now nearly $5 billion. A valuation of $25 billion or more would also validate Snap Chief Executive and co-founder Evan Spiegel’s decision in 2013 to spurn a $3 billion cash takeover offer from Facebook Inc. While executives at some of the largest private companies, including Uber, have said they plan to stay out of the public markets as long as possible, Mr. Spiegel last year said at a conference that the company has a plan for an IPO and wouldn’t field acquisition offers. He hasn’t laid out a time frame. Snap could use some of the proceeds from an IPO as currency for acquisitions in so-called augmented-reality or virtual-reality, one of the people said. Snap recently changed its name from Snapchat as it moves from the main app for which it is known, which makes virtual messages disappear and is especially popular with teenagers. As part of that transformation, Snap recently said it would release its first hardware product, sunglasses known as Spectacles that are equipped with a wireless video camera. Snap hasn’t hired any banks as it works on a public filing, known as an S-1, people familiar with the matter said. Snap’s chief strategy officer, Imran Khan, is part of the team that is working on the filing, these people said. Mr. Khan joined from Credit Suisse Group AG in 2015, where he was head of global internet investment banking and served as a key adviser on the Alibaba IPO, at $25 billion the largest share sale in history. Snap has raised roughly $2.4 billion in the private markets from a wide range of investors including Benchmark, Lightspeed Venture Partners and Fidelity Investments.
- dcgudeman 10y agoA level of $25 billion or more would also represent a significant premium to Snap’s most recent valuation, which was pegged at $17.8 billion in its last funding round in May. That would bode well for a new-issue market that until recently suffered from reluctance on the part of public investors to match the private valuations of many Silicon Valley startups. I honestly wonder how they come up with these numbers.
- w1ntermute 10y agohttps://m.signalvnoise.com/press-release-basecamp-valuation-tops-100-billion-after-bold-vc-investment-c221d8f86ad7 https://m.signalvnoise.com/press-release-basecamp-valuation-...
- pb 10y agohttps://signalvnoise.com/posts/2585-facebook-is-not-worth-33000000000 https://signalvnoise.com/posts/2585-facebook-is-not-worth-33...
- w1ntermute 10y agohttp://seekingalpha.com/symbol/GRPN http://seekingalpha.com/symbol/GRPN http://seekingalpha.com/symbol/TWTR http://seekingalpha.com/symbol/TWTR http://seekingalpha.com/symbol/ZNGA http://seekingalpha.com/symbol/ZNGA Cherry-picking isn't that hard. Plus, when DHH wrote that post, Facebook was a totally different company. They only really started justifying their valuation in 2013, after they got lucky with how mobile advertising worked to their advantage.
- pb 10y agoFacebook sure seems to get lucky a lot :) I don't need to cherry pick because DHH only wrote about 1 company. Also, given that fb is now worth $370B, you could have invested in all four companies and still made a lot of money, which is basically how venture works. You don't expect to make money on most deals, just the occasional amazing one.
- mahyarm 10y agoThis is far quicker time to IPO than most startups.
- jonknee 10y agoIt's five years old and they're talking about a possible IPO six months from now, not exactly a huge rush.
- georgeecollins 10y agoGiven what is happening with Twitter I wonder if people will become more skeptical of these valuations. It is not that Twitter or Snapchat is a bad business. It just isn't that valuable.
- jonknee 10y agoFacebook was valued at $104b when it had an IPO and there was similar shock at valuation. It's now worth $370b because they were able to monetize mobile better than anyone else. Snapchat might fizzle out, or it might be able to successfully pull off mobile branding advertising (opposed to the social targeted advertising that Facebook owns). If so, watch out.
- samfisher83 10y agoEven their valuation is based on some very high growth rates. If their growth rates drops the stock would tank.
- jonknee 10y ago> If their growth rates drops the stock would tank. Which is the case for literally every publicly traded company.
- samfisher83 10y agoFB FCF is roughly 6B their cap is 370B. That is 60x of FCF. Most companies aren't that extreme. If there was a slow down in Growth their fall would be much larger then a more mature company because a majority of their valuation is based on growth.
- jonknee 10y agoThere is no denying FB is priced for growth, but it's growing like crazy while the rich valuation is coming down. Your $6B FCF figure is from last year and they are blowing that out of the water so far this year (+60% in the first 2 quarters). It's not fair to use today's stock price with last year's cash flow and decide that it's extreme.
- wehadfun 10y agoDon't use snapchat do they display ads? I thought they were mainly used for sexting am I wrong?
- bookmarkacc 10y agoThey have ads. Not used just for sexting.
- wuliwong 10y agoAs a SnapChat user, I don't really notice "ads." There are things like stories (which I am guessing are things that they charge money to people to get placement) and promoted filters and overlays you can put on your pictures. But when I am watching a friend's SnapChats, I am never interrupted by advertisements. I really wonder what is the amount of revenue that they are generating through advertising. Off the top of my head, my recollection is that 95% of the time I open snapchat I do not really see an advertisement. I don't use the discover section, I almost never look at the "stories" and friends very rarely use promoted filters. I wonder how effective ad buyers are finding the SnapChat advertising platform. This is pretty highly contrasted to my recall of Facebook which I see advertisements nearly 100% of the times I open the app. I am a regular user of both apps.
- ryanlol 10y ago>I thought they were mainly used for sexting am I wrong? Completely. Mainly used for sharing random photos of your day. Food, sights, etc.
- delecti 10y agoSnapchat is often used for sexting, but certainly not mainly. Think Twitter for pictures, as a vague comparison. Quickly consumable and disposable updates in picture form. Compare to Instagram, which has a somewhat higher quality expectation because the posts are permanent. There's also an expectation that people will post less frequently, while with Snapchat, it's not unheard of to post a dozen updates in a stretch.
- gaius 10y ago
- woodruffw 10y agoI've been using Snapchat for around 3 years. It's probably the only purely social network I regularly use anymore, which is a testament to its staying power. That being said, I've noticed numerous changes over the past half year or so that have lessened my tendency to use it. There are ads everywhere - on the Stories page, inside stories, on filters, and so forth. Performance gets worse with almost every release, which would be understandable were it not for the fact that the end user product has remained functionally identical for the last year or so. The new "Memories" feature, which I've never bothered to enable, feels like a Twitter-like step back from the original Snapchat model (transient, temporary photos). It'll be interesting to see how Snapchat reconciles this massive IPO with its users interests. As an end user, I don't feel particularly optimistic.
- whateveracct 10y agoSnapchat sadly takes a dump when I open it on my 5S. I can't just open it and quickly snap something anymore.
- marcoperaza 10y agoI recently switched to my old 5C after breaking my newer phone and it's totally unusable. It takes a good 10+ seconds to be able to take a picture. Swiping to any of the side interfaces takes several seconds. Opening a snap is also atrociously slow.
- dilemma 10y agoSnapchat's interview process for software engineers is so difficult that nobody's ever been able to pass it.
- ben_jones 10y agoI wonder where testing and QA measures fall short on these massively popular applications such that they become slow and bloated over time. Is it the case of management seeing actual metrics and not caring? Or does it become harder and harder to find such issues due to increasing legacy device/library/code support (even for companies like Snapchat and Facebook!)?
- dschiptsov 10y ago$25B for a few millions of selfies of teens.. something is wrong here.)
- iMuzz 10y agoHave you actually tried the product before? Don't be too quick to judge.
- fullshark 10y agoI have used it and I hate it (age 30+) but can't deny its popularity
- fs111 10y agos/teens/millenials/ ftfy
- slackoverflower 10y agoactually 50 minutes every day of 60% of 18-34 year olds in the United States. Very valuable.
- azinman2 10y agoPeople said the same thing about Facebook. There's a tendency to dismiss how important communication is to humans.
- jonthepirate 10y agoIceberg ahead, captain! I wish there was some way to short this.
- changdizzle 10y agoCouldn't you just short the stock when it IPOs? :)
- f4rker 10y agoDotCom Bubble 2.0 is real $25B for an app like SC w/o a web presence is far far too high.
- ghull95 10y agoFacebook IPOd at ~$100B with annual revenue of roughly 4B. Snapchat is estimating 2017 revenue at 500mm-1B so it is not much different than what FB IPOd for. While the comparison of FB and Snapchat may not be the most valid, I still think it is worth noting that the Snapchat valuation isn't exactly unheard of.
- jamesrom 10y agoWhat you are seeing here is called anchoring. Now when the actual IPO happens and it's $10bn, you'll think it's a good buy. https://en.wikipedia.org/wiki/Anchoring https://en.wikipedia.org/wiki/Anchoring
- acchow 10y agoDoes this actually work on the real stock market? (i.e. with so-called "smart money" and not penny stocks)
- adventured 10y agoI've never seen an IPO underwhelm that much and have it not be a negative overhang. The financials will either support $10b, something more, or something less, in terms of exciting investors. If the financials - growth etc - are underwhelming, institutional investors are not going to magically get excited about the stock just because it comes out at $10 billion. Twitter (among others) has has been a disaster, institutions are going to be skeptical unless the numbers are extremely encouraging.
- guelo 10y agoI have huge respect for Evan Spiegel. So many others, like the Instagram and Whatsapp guys took Facebook's money and folded but Spiegel went for it creating one of the rare new successful independent social networks. Bravo.
- sroecker 10y ago$25B and they can't even afford an API.. If you want analytics you have to rely on a 3rd party provider who somehow gets the information by logging into your account. I guess if you're a key account they will send you some data and maybe even some nice visualizations. I did some research and people really track their audience with spread sheets. Influencers send screenshots of their accounts to advertisment companies to prove how many followers they have. Seriously.. If they want to monetarize their platform they should open at least part of their API.
- ihunter 10y agoEverytime I use snapchat I feel bad for the major content generators on the site. It's literally a 18 hour a day job of taking video in every situation they're in. I can't imagine that level of imprisonment.
- droidbro 10y agohttps://www.reddit.com/r/Android/comments/567m32/can_we_talk_about_snapchat_quality_on_android/d8i248m https://www.reddit.com/r/Android/comments/567m32/can_we_talk...