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Given 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.

Given 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 ago
Facebook 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 ago
  Even 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 ago
      FB 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 ago
        There 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.
jasode 10y ago
>Given what is happening with Twitter I wonder if people will become more skeptical of these valuations. It's not the outcome of Twitter that will determine it... it's the upcoming S-1 filing[1] that would finally disclose their financial details. If it shows that Snapchat is printing money instead of losing it, the stock will be hot. However, if the Snapchat's S-1 shows they're losing money like Twitter did (2013) and Groupon (2011), then they have to hope on getting their desired IPO price based on hype instead of the underlying financials. That S-1 is going to be scrutinized by everybody. It will have user counts, revenue, costs, etc. And it won't just be the potential investors analyzing it. I'm sure Larry Page, Mark Zuckerberg, and the CEOs of Chinese internet companies (TenCent, Alibaba), etc will get to know those Snapchat numbers by heart as well. Every venture capitalist in the internet & mobile sectors will also memorize those S-1 numbers. It's going to be a feeding frenzy. >It is not that Twitter or Snapchat is a bad business. Twitter is a good product but a bad business. People like it for the utility but it doesn't make any money. The Snapchat S-1 may reveal that it's both a good product and a spectacular business. Everybody has been salivating for those numbers since nothing new has been uncovered since the 2014 leak.[2] [1]https://en.wikipedia.org/wiki/Form_S-1 https://en.wikipedia.org/wiki/Form_S-1 [2]http://gawker.com/snapchat-lost-a-ton-of-money-last-year-1706957414 http://gawker.com/snapchat-lost-a-ton-of-money-last-year-170...

Given 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 ago

Facebook 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 ago
Even 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 ago
    FB 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 ago
      There 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.

jasode 10y ago

>Given what is happening with Twitter I wonder if people will become more skeptical of these valuations. It's not the outcome of Twitter that will determine it... it's the upcoming S-1 filing[1] that would finally disclose their financial details. If it shows that Snapchat is printing money instead of losing it, the stock will be hot. However, if the Snapchat's S-1 shows they're losing money like Twitter did (2013) and Groupon (2011), then they have to hope on getting their desired IPO price based on hype instead of the underlying financials. That S-1 is going to be scrutinized by everybody. It will have user counts, revenue, costs, etc. And it won't just be the potential investors analyzing it. I'm sure Larry Page, Mark Zuckerberg, and the CEOs of Chinese internet companies (TenCent, Alibaba), etc will get to know those Snapchat numbers by heart as well. Every venture capitalist in the internet & mobile sectors will also memorize those S-1 numbers. It's going to be a feeding frenzy. >It is not that Twitter or Snapchat is a bad business. Twitter is a good product but a bad business. People like it for the utility but it doesn't make any money. The Snapchat S-1 may reveal that it's both a good product and a spectacular business. Everybody has been salivating for those numbers since nothing new has been uncovered since the 2014 leak.[2] [1]https://en.wikipedia.org/wiki/Form_S-1 https://en.wikipedia.org/wiki/Form_S-1 [2]http://gawker.com/snapchat-lost-a-ton-of-money-last-year-1706957414 http://gawker.com/snapchat-lost-a-ton-of-money-last-year-170...