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Am I reading this right? I'm no banker... Their losses for 2016 were ~$500m? That's very steep, but it looks like revenue grew almost 700%. Wow. Insane numbers

• charlesdm 10y ago
  $50 it'll tank like Twitter. (And to the people downvoting me, please explain why you think it won't tank like Twitter - thanks!)
  • Swizec 10y ago
    Funnily, the way I see most people use Snap is "Twitter but video"
    • charlesdm 10y ago
      Their revenue ($400MM) is impressive for a messaging app, but honestly, the valuation it carries at this point is nuts. It's just an app and I personally don't believe it has a sufficient economic moat to justify that. Where's the ecosystem? How can we bolt on value from having that audience? Unlike Facebook, we won't have a billion people using Snapchat any time soon. Then again, I didn't believe Instagram was worth $1bn when acquired either, and looking back, was wrong on that. But there's a massive disconnect between the current valuation of Snapchat, and the valuation of Instagram (when it was acquired).
      • angryasian 10y ago
        >Their revenue ($400MM) is impressive for a messaging app Compared to Line and Wechat its really not
        • charlesdm 10y ago
          You're right. I converted the Line Corp yen revenue number to USD, but looks like I missed a zero. Line has a market cap of $7bn, and does $1bn in revenue.
  • bduerst 10y ago
    Didn't downvote, but Twitter stagnated and there isn't any reason to believe Snap will too. Social Media is about adapting to the changing trends, and for a while Twitter's strategy was to stay as close to it's core product as possible. Periscope is great but it came a little too late.
    • moxious 10y ago
      This is the reason to believe they'll stagnate: "We have incurred operating losses in the past, expect to incur operating losses in the future, and may never achieve or maintain profitability." Sooner or later, you run out of other people's money, and businesses which have no plan to be long-term profitable should not be.
  • segmondy 10y ago
    Predicting the future is hard. If they raise enough money, they might figure out how to make profit better than twitter did. Frankly, I can't predict anything anymore, if anything, I'll say they will do well. The opposite of my gut feelings. I've been 100% wrong in all the startups I tried to predict, the last 5 presidential elections, my favorite NFL team prospects for playoffs. I'm just bad. I agree with you, but I'll invest if I had the funds. You might be logically rational, but there is a large part of the world that is not.
    • moxious 10y ago
      Question here is whether you'd buy them because they're a good company, or because you'd want to play the other chumps that believe they're a good company. Twitter had a nice pop after IPO and while they're a fraction now of their IPO price, if you played the market well rather than the company, you could have come out well.
  • spoinkaroo 10y ago
    So why not short the stock? You will likely have to wait until after the IPO and may pay an arm and a leg for the privilege with limited initial float, but it's entirely up to your discretion. Even more appealing if snapchat does well on the first day of trading.
    • charlesdm 10y ago
      The same reason you don't use margin if it costs you 10% per year: risk vs reward and potential upside.
      • spoinkaroo 10y ago
        If you are as confident as you sound you may want to pay the 10 % annualized to short some shares, especially if it pops after the IPO. I tend to get annoyed when people have extremely overconfident predictions yet don't act on them. Just responding to your parent comment, it's hard to tell how bullish your actually are on SNAP from a brief paragraph. I'm bullish also but won't touch the thing unless it gets into territory similar to GPRO.
        • charlesdm 10y ago
          Not bullish at all on SNAP at current valuations. It needs to drop significantly (i.e. more like an $7-13bn valuation, with good growth, and preferably $700MM-1bn in revenue) before I will consider buying in. There are plenty of stocks out there with sufficient potential upside that I don't need to use leverage (either by borrowing at high interest on margin, or by borrowing and shorting expensive shares). Borrowing at low interest rates I will consider, but probably only for stable dividend shares. I'm 90% certain that this won't be a killer IPO, if you look back 2 years after it floats. But there are sufficient interesting companies out there for me not to care about how it does, either way. Just putting it on my 'to watch' list. Edit: thoughts on GPRO and TWLO?
          • spoinkaroo 10y ago
            GPRO was egregiously expensive post-ipo but shorting the damn thing cost an arm and a leg. I haven't followed TWLO.
  • skewart 10y ago
    I think you might be right. I've long been bullish on Snap, but seeing their user numbers plateau this year has me reconsidering. 2016 was a year when they should have seen exploding growth among new user groups. Perhaps, a bit like Twitter, there are only so many people out there who want the unique functionality that Snapchat offers. That said, there are a lot of smart people at Snap, and they seem to have a culture that encourages imagining, and shipping, big changes to their core product. So they may be able to get things back on track. But if they can't restart the growth engine soon I'll seriously consider shorting their stock.
• moxious 10y ago
  Insane is right. They lose that much money, and don't have a plan for profitability. If you lose money on each customer and scale the business...well, uh, losses scale too. I guess I'm just old fashioned, here I thought the point of businesses was to make money, at least eventually. This quote is a killer: "We have incurred operating losses in the past, expect to incur operating losses in the future, and may never achieve or maintain profitability." haha
  • mikeyouse 10y ago
    All of the same criticisms could be applied to YouTube, Facebook, Instagram, etc while they were at that stage. Some turn out to make pallet-fulls of money, some (Twitter) never quite crest. The quote at the end is just boiler plate language they need to include in their S1 so they aren't sued by shareholders in 10 years.
    • moxious 10y ago
      Pretty sure those other companies declared an intention to make a profit. Saying the opposite is indeed news. And sure, the company might turn the corner. But seriously why would investors pay $3 billion with a pitch like this? I guess they're just playing other investors in the end. There seems neither money making capacity here nor the promise of it by their own admission. Are you saying we should ignore their clear words on this topic and decide the management is wrong and they'll probably end up profitable?
      • ilyanep 10y ago
        It's a risk factors statement, not an intent statement. They also aren't seeking to have anything else in that list become true.