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If you have a large amount of money you don't mind gambling with and can afford to stay solvent longer than the market can stay irrational, I feel like this is
by mattmaroon 10y ago
If you have a large amount of money you don't mind gambling with and can afford to stay solvent longer than the market can stay irrational, I feel like this is the best short ever.
My 5 year target on SNAP would be roughly one can of Pringles.
When the next market meltdown happens, Michael Lewis will write a great book about people buying non-voting shares of a fad company at a $24b valuation that says in its prospectus that it has no plans to make money and maybe never will.
Or I'm wrong and they won't be a fad and will figure out how to monetize, but I feel like the multiplied probabilities of both make it as clear a bet as you ever get.
- econner 10y ago> My 5 year target on SNAP would be roughly one can of Pringles. What does this sentence mean?
- SteveNuts 10y agoHe means that in 5 years the company will be worth about the price of one can of Pringles (chips/crisps in the US)
- artpar 10y ago"Pringles" is a "pack of chips" (more or less), so basically he means, "a pack of chips" is what the company will become. (this is what i understand :p )
- traek 10y agoWhat does this clarify? "A pack of chips" isn't a common idiom.
- nsm 10y agoA pack of chips is generally really cheap in any region/country, so I think in the context, the idiom is explanatory.
- taormina 10y agohttp://lmgtfy.com/?q=can+of+pringles http://lmgtfy.com/?q=can+of+pringles
- traek 10y agoYes, I understood what was meant, I was pointing out that the parent comment didn't clarify it any further for the person who did not understand.
- askafriend 10y agoI think he meant that the price would come down to about $2.50 or so...
- calchris42 10y agoAnd here I was thinking he was saying I should invest in Pringles. :P
- mvindahl 10y agoI once invested in a can of Pringles. Hours later, it's value was down to zero. A terrible financial decision.
- dang 10y agoPlease don't do this here.
- cwkoss 10y agoThey mean it will be worth nothing
- biot 10y agoAre you saying a can of Pringles costs nothing?
- carbocation 10y agoThey expect the value of the company to be equivalent to the value of a can of potato chips; approximately $0.
- imranq 10y agoWow did 4 people respond to one comment at the same time?
- deleted 10y ago[deleted]
- empath75 10y agoShorting snap will be hard right after the IPO, but if SNAP tanks, the whole tech sector is going to fall over, so shorting basically anything is probably a strong play.
- oh_sigh 10y agoWhy would the tech sector be generally affected?
- ajmurmann 10y agoWe haven't seen a good tech IPO in a while. Given that and the supposed diminishing funding the Snapchat IPO will set a signal. If Snapchat crashes it will reinforce the narrative that tech is in trouble.
- empath75 10y agoAll the unicorns are going to have valuations looked at again, which is going to make it hard for them to raise money, which is going mean they'll have to lay people off which is going to have ripple effects throughout the economy. Might not impact google much, but it'll hit amazon for sure as stuff like aws spending gets looked at.
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- deleted 10y ago[deleted]
- idiot_stick 10y ago>so shorting basically anything is probably a strong play. I'm positioning myself for massive fiscal stimulus (that was denied the Democratic president) and higher stock prices. I guess we'll see.
- dragonwriter 10y ago
- simantel 10y agoThey've already figured out how to monetize, and did $400M in revenue last year. I do think that the $24B valuation is a bit high, but I don't think it's "the best short ever."
- eanzenberg 10y agoThat's the beauty of the market. You put your money where you mouth is or shut the f up.
- jforman 10y agoYeah well I thought GOOG was a dumb investment since >95% of their revenue came from AdWords and surely MSFT & others would pump billions in and make a real dent. The vast majority of their revenue is still from AdWords despite those billions being spent, but that GOOG pie's only grown over time.
- Apocryphon 10y agoI guess in tech sometimes you just have to expect the competitors to be too incompetent/short-sighted to be an existential threat. That's how I always understood Apple's survival, at least.
- lettersdigits 10y ago> you just have to expect the competitors to be too incompetent/short-sighted Same probably goes to %99.9 of all investors as well, otherwise those %99.9 would have been rich from buying Google after their IPO. Being short sighted is a humans' thing, probably. not a tech CEOs' thing..
- adventured 10y agoBuying Google at the IPO wouldn't have made most investors rich anyway. They IPO'd with far too high of a market cap already (as contrasted to Microsoft, Oracle, Dell, Cisco, etc. from the prior generation). A 17x return over 12 years won't make most (non-rich) investors rich unless they bet every dollar they have on said investment (a nearly impossible and entirely impractical scenario). An average investor betting $10,000 - $25,000 on Google's IPO would be a serious investment. $170,000 - $425,000 is a great return off of that, it's just not anywhere near rich. Had they IPO'd at something more like what tech companies used to, an investor could have seen a 250x to 1000x return up to this point. That would make you rich off of a $10k bet. Amazon for example, has produced something like a 560x return so far from the IPO.
- bbcbasic 10y agoI shorted Google back in the day! Gave up once I lost $500 or so.
- lettersdigits 10y ago> I feel like this is the best short ever 'feeling like' is not a good way to convincing me to short something. nor long. nor anything ;) > ..., but I feel like the multiplied probabilities of both make it as clear a bet as you ever get So you 'feel' like it would be a 'clear bet' ? sounds like a big maybe to me. How about NOT shorting/longing at all ? I feel like this is the clearest bet for me ;) (edit: spacing)
- fullshark 10y agoIf you want to bet against Snap but think shorting is too risky you can buy put options.
- nradov 10y agoOptions won't be available to retail investors until at least 5 days after the IPO (maybe more).
- nikcub 10y agoHave you ever shorted a company? It really isn't advice you should be loosely throwing about - the potential downside is unlimited. It really is a tool reserved for those with special broker access and a better understanding of what it means. Further, if anybody had actually followed any of the short advice that has been given in HN comments in the past 10 years, they almost certainly would have lost unlimited amounts of money. If you really want to put your money where your mouth is, post some bitcoin, a term period and a price target and see if anyone takes you up one it. I'd almost certainly book everything you offer on SNAP going to $0 in 5 years.
- mikemintz 10y agoOne could buy long-term (LEAPS) put options to bet against a company, avoiding the unlimited downside of a naked short.
- nikcub 10y agowith a price target of $0 you could buy them all day, especially in a market where actual frauds and ponzi schemes don't go to $0
- deleted 10y ago[deleted]
- PhantomGremlin 10y agoIt will probably take several weeks before it is possible to purchase put options on Snap. The cost of LEAPS is very high when they are purchased on speculative companies. For example, take Tesla. Tesla closed today at $250. To purchase an "at the money" $250 put dated January 2019 (aka a LEAP) would cost you $54. So TSLA stock would need to fall below $196 at expiration before you began to make money on it. That's a simplification because you could always sell your put early, possibly at a profit. Buying a January 2018 put would be cheaper, but still quite expensive at $37. To reduce the cost of a put you can buy one that is "out of the money". For example the TSLA $200 put dated January 2019 would be cheaper, only $31. However, TSLA would need to fall below $169 before you made any money at expiration. So, look at that last example. TSLA now $250, you pay $31 now and you don't make money unless TSLA closes below $169 at expiration. Math like that is why sophisticated investors often short stock rather than buy puts. They need to pay a price to "borrow" the stock to short but for many companies that price is quite low, below 10% a year. The cost of buying put options on the same stock could be two or three times as high as directly shorting the stock. When SNAP puts become available I expect the math to be much worse than for TSLA. It will cost A LOT to buy puts on such a speculative company. In trader talk, the "implied volatility" will be very high.
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- bdrool 10y ago> says in its prospectus that it has no plans to make money and maybe never will Assuming you are talking about this sentence from the "risk factors" section of their S-1: > We have incurred operating losses in the past, expect to incur operating losses in the future, and may never achieve or maintain profitability. That's relatively boilerplate and doesn't really mean much. The "risk factors" section is always very gloom-and-doom to avoid the appearance of over-promising returns. For example, Workday said "we have a history of cumulative losses and we do not expect to be profitable for the foreseeable future" in their risk factors. Shake Shack included "our inability to open profitable Shacks" as a risk factor in their S-1. Google listed pages and pages of "risks" that basically boiled down to "advertisers might stop using us". It's really not that unusual to say something like that. You might be right and Snap could be headed for a big fall, but that statement alone isn't much of an indicator.