4 ms·

$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.

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.