23 ms·

Snap Jumps in Debut After App Maker Raises $3.4B in IPO

263 points by rayuela 10y ago

usaphp 10y ago
Reminds me of Facebook IPO, a lot of people were claiming it will plunge and eventually go bankrupt. But companies with such big daily active audience that can be targeted with ads are here to stay.
- jonknee 10y ago
  Considering it went smoothly it doesn't remind me of Facebook's IPO at all. Twitter should be all the evidence you need of how hard it is to succeed selling advertising to a big audience. Snap might crush it, but I would give them a few earnings reports before comparing them to anyone.
  - maxerickson 10y ago
    Facebook's market debut showed that Facebook did an excellent job controlling and pricing the IPO. Banks complaining -> Facebook and insiders won. This debut just shows that Snapchat wasn't in the driver's seat. Major holders are still mega wealthy though.
    - jonknee 10y ago
      No, it was a disaster that led to years of litigation. NASDAQ admitted it was their technical error and paid millions to settle lawsuits stemming from it. This obsession by techies that you're leaving money on the table if your shares go up after an IPO is bizarre.
      - maxerickson 10y ago
        It priced 2 or 3 billion dollars over the early valuation estimates (a few weeks before the $38 debut, the roadshow was floating $32 as the top number). It was a $30 million settlement.
      - ceejayoz 10y ago
        > This obsession by techies that you're leaving money on the table if your shares go up after an IPO is bizarre. How is it not leaving money on the table?
      - toast0 10y ago
        > This obsession by techies that you're leaving money on the table if your shares go up after an IPO is bizarre. If the company gets $X/share at the beginning of the day, and bankers get $X * 1.5/share at the end of the day, that feels like a big donation to Wall Street. If I'm an investor, I'd rather the company have all the capital than 2/3rds of the capital as well. It feels like if a company would sell a portion of the offering through the traditional channels, and the remainder at market prices throughout the first couple days of trading, it might better capture investment.
    - jedberg 10y ago
      > Major holders are still mega wealthy though. EDIT: I was wrong, that's just what they are selling today, not the total value of their shares. In which case, good for them! It actually surprised me how little the founders got. Their shares are worth about $400M each. Certainly nothing to sneeze at, but usually when you're the cofounder of a 24 billion dollar company, you're a billionaire. :)
      - jonknee 10y ago
        That's because they are keeping most of their shares: http://www.cnbc.com/2017/03/02/snap-ipo-what-evan-spiegel-bobby-murphy-will-make.html http://www.cnbc.com/2017/03/02/snap-ipo-what-evan-spiegel-bo... > According to Snap's latest S-1 filing with the SEC from Feb. 27, Spiegel and Murphy plan to sell 16 million shares each on Thursday. The company opened at $24, after it priced its public offering at $17 a share. It's just a small fraction of the number of shares the co-founders own in Snap Inc. Both men will still have 97,164,485 after Thursday's sale.
        jedberg 10y ago
        Oh I read the same article but I read it wrong. I thought they meant that would be the total value of the shares they hold after the IPO, not just what they are selling today. My bad.
    - bduerst 10y ago
      Precisely. Facebook came out on top with their IPO by gaining more cash than expected, the average Joe did not because they lost cash.
  - DougN7 10y ago
    Groupon was also similar if memory serves. My prediction is Snap will be the Myspace of 10 years from now.
    - chillydawg 10y ago
      Groupon was a totally different business. Network effect didn't really add anything or give them lock in. Customers and businesses would go wherever prices were lowest. It was always doomed, really.
- ptrptr 10y ago
  Especialy with such efficient ad sales people - https://mic.com/articles/170019/leaked-snapchat-emails-anti-gun-charity-told-to-pay-or-nra-ads-may-appear-on-videos#.DT4a1hUou https://mic.com/articles/170019/leaked-snapchat-emails-anti-...
- monatron 10y ago
  The Facebook IPO was a disaster and did stay below target for quite awhile post-IPO
  - maxerickson 10y ago
    It was a glowing success for Facebook!
    - ryanmerket 10y ago
      Is that why they sued NASDAQ?
      - maxerickson 10y ago
        $1.4 billion pop on Snap publicly traded shares. $30 million lawsuit settlement awarded to Facebook.
  - vostok 10y ago
    I'm not a banker so maybe I'm missing something, but I wouldn't be too happy if my company popped after the IPO. The way I see it, that just means that I left money on the table. If anything, this increases my respect for Zuckerberg and team. I'm not really excited about the prospect of bankers lining their favored clients' pockets with my money.
    - brangalinafoeva 10y ago
      Your company would have left money on the table, but not you as an equity holder.
      - vostok 10y ago
        It's not uncommon to sell your personal shares in the IPO. Even if you don't sell your own shares, selling 10% of the company at $5 billion (no pop) is strictly better than selling 10% of the company at $3 billion (assuming a 60% pop to $5 billion). The company has more money and you own the same portion of the company.
- xienze 10y ago
  Well the major difference between the two is that Facebook can engage grandma as well as junior. It has broad cross-generational appeal. The whole point of Snapchat is "mom and dad don't use it" which means they're beholden to the whims of a very young audience. Which I guess is good, since young people aren't known to move on to the next big thing at the drop of a hat.
  - brangalinafoeva 10y ago
    Young people don't stay young forever.
  - DougN7 10y ago
    > since young people aren't known to move on to the next big thing at the drop of a hat. I'm assuming that was said with a whole lot of sarcasm? In my opinion, that will be the death of Snap - something else new and shiny will come along in a year or two and Snap will be a ghost town.
    - xienze 10y ago
      Yes, plenty of sarcasm.
    - shimon_e 10y ago
      Bring in myspace.
- ryanmerket 10y ago
  >> But companies with such big daily active audience that can be targeted with ads are here to stay. That's just it. Snapchat has very little targeting data, and targeting is a force multiplier for ads revenue. They don't even have explicit gender data. Edit: Downvote all you want. They don't ask the users for gender. It's implied. See Twitter for a similar tactic.
  - joshuamorton 10y ago
    They have extremely powerful targeting data: geolocation. Afaik, one of snap's biggest revenue sources is geolocked filters.
    - ryanmerket 10y ago
      How is that powerful? Any mobile app has geolocation data. How is that a market differentiator? That's like saying they have mobile OS targeting... So?
      - joshuamorton 10y ago
        Few other apps that I'm aware of provide live advertisements for events happening nearby as part of your natural use of the app in a really noninvasive way, and provide incentive to share those advertisements. Snapchat geofilters are non-invasive and will be seen in normal app use, but don't really bother you. They can inform you of events happening nearby or, if you're at an event, you can use the geofilter when snapping, which shows your friends that you endorse the event/product/whatever, in a totally transparent, opt-in way. That's super powerful.
- InternetUser 10y ago
  And that's not their only product: Bitmoji has been the #1 iPhone app overall since January 11, and it was already the #1 iPhone Utility app since July 22, 2016 (Log in to see) - https://www.appannie.com/apps/ios/app/bitmoji-keyboard-your-.. https://www.appannie.com/apps/ios/app/bitmoji-keyboard-your-.... https://www.appannie.com/apps/ios/top/united-states/overall/.. https://www.appannie.com/apps/ios/top/united-states/overall/.... And yesterday on eBay, 22 pairs of Spectacles were sold, with one pair went for $229 and 2 others went for $200 each, even though http://www.spectacles.com http://www.spectacles.com has been offering them for $130 since last Monday - http://www.ebay.com/sch/i.html?LH_Complete=1&LH_Sold=1&_from.. http://www.ebay.com/sch/i.html?LH_Complete=1&LH_Sold=1&_from.... Then there is the rumored Android Snap Phone: http://mashable.com/2017/02/14/snapchat-phone-concept-design.. http://mashable.com/2017/02/14/snapchat-phone-concept-design.... And Snap Drones, as reported on page 2 of today's NYTimes - https://www.nytimes.com/2017/02/28/technology/snapchat-drone.. https://www.nytimes.com/2017/02/28/technology/snapchat-drone.... http://i.imgur.com/6Nl0Ymq.jpg http://i.imgur.com/6Nl0Ymq.jpg
doc_holliday 10y ago
I know that the Snapchat platform is worth something, it has high engagement and adoption of 18-24 year old age segment, and that is worth a lot in terms of attention and advertising $s. However, this just feels completely out of proportion to earnings and downside does not seem priced in. Willing to be proved wrong of course, but especially seeing as they are non voting shares, I cannot understand this pricing.
- empath75 10y ago
  FOMO. And the market is really frothy in general right now.
  - komali2 10y ago
    For some reason whenever people use the word "frothy" to describe something, I gag slightly.
    - knicholes 10y ago
      Probably it's from the maturation clinic you took in school where they covered STIs. That and "cheesy."
      - komali2 10y ago
        Nah as a Wisconsite "cheesy" just describes the natural state of food for me ;P
- 23443463453 10y ago
  It makes absolutely zero sense to me too, but what do I know, other than that the idea seems to be that snapchat, like Facebook before it, is seen as the drug that compels today's generations. It was newspapers, radio, and TV before and now it's Snapchat after Facebook. At least I think that's the reasoning. If you can capture people's minds and compel them to put real money into people's pockets, then you can capture the whole of society. If you think about it, we are somewhat still in an equivalent world where there were only a few radio or TV stations, i.e., Facebook, Google Ads, Snapchat, etc. who command the minds of ever more people in the world. It's a de facto cartel monopolized market not unlike the Robber Baron period of American history, where few dominated the vast majority of economic activity with their stranglehold. Unfortunately, due to the inherent network effect of the internet and technology, it will only ever increasingly become a race for who can steal away the vast majority of human minds of the ever increasing digital human herd. Snapchat will have its day as Facebook starts atrophying and contracting as people shift to Snapchat, then something else will come to poach away a future generation that is then ridden to poach away minds from Snapchat. It will be an ever repeating cycle of one company stealing away the vast majority of minds from the last company. At least as long as certain conditions are true.
pibefision 10y ago
Reminds me of Twitter IPO... just wait.
- moolcool 10y ago
  I think this will be worse. Snapchat isn't nearly as culturally sticky as Twitter. Sites like Twitter, Instagram, and Facebook have a robust friend/follower system, and users have a huge backlog of things they contributed to the platforms. No contributions on Snapchat last more than a single day, so what is motivating users to stay on the platform instead of using Facebook or Instagram's offerings? Their friends lists exist both of those places too. In 10 years we'll look back on Snapchat as a flash in the pan.
  - briantmaurer 10y ago
    This isn't entirely true – Snapchat already has features that let you save content permanently.
  - jeffbax 10y ago
    I think Snap has potential to be huge… anything that wins the race to replace TV is going to be big. Whether they can do it before FB clones them/leverages their network is a big open question. That said, despite the fact that I love Twitter more than any other network, almost none of my friends use it maybe ~a dozen people I know closely in real life still post to it. Almost all of my friends use Snapchat and complain about my lack of engagement with it. Anecdotal, but I don't think they are comparable… additionally if your (likely closer nit group of vs. FB's "everyone you know") friends aren't posting, brands are putting up a TON that people seem to really like.
    - moolcool 10y ago
      Snap is the last thing that would replace TV. Nobody sits down and spends a consecutive hour on Snapchat
      - sgnl 10y ago
onion2k 10y ago
I wonder how much of this is investors with a good understanding of Snap's potential buying because they feel it's a good gamble versus stock market investors not having many opportunities to invest in tech startups because there's so few IPOs.
chollida1 10y ago
I'm happy for the NYSE that this went well. SNAP has done some pretty large volume so far with no problems. Interestingly enough, well atleast to someone who cares about the cash equity markets, the NYSE actually did a test run last week to try and simulate the chaos that occurs during any hot IPO. So now we know that there is atleast some appetite for shares with no controlling interest and no indication of paying out a dividend any time soon. A current market cap of 30 Billion is a pretty darn big accomplishment! Two big dates in the future to look out for....... 1) July 30 when the first lockup date is over. I'm not sure how many shares come off restriction. 2) May 15 when they do their first earnings report. I'm interested to see if they try and make people view the company via GAAP accounting(PnL) or non GAAP measures like engagement, monthly users, etc.
- gregshap 10y ago
  GAAP vs non GAAP accounting refers to how you calculate PnL, not whether you use things unrelated to accounting to hint that you are growing and might make money in the future. You can definitely use strict GAAP accounting and also brag that users are super duper engaged.
  - chollida1 10y ago
    I think you are being more than a bit pedantic for very little benefit. I never said "Non Gaap accounting", I said "Non Gaap measures". That doesn't have to mean Pnl, it can, and was intended, to mean things like user engagement numbers, monthly uniques, etc. Is there a different terminology that you would prefer that I use? how about this........ I'm interested in seeing whether they focus on their earnings vs user growth numbers. Would this satisfy you?
    - dmoy 10y ago
      I for one appreciated Greg's note and your follow-up. When you said non gaap initially I thought you explicitly meant the non gaap but still accounting systems that a large, large number of companies out on quarterly earnings (they'll do it right next to it, say " gaap X, non gaap Y ". So you may see it as pedantic, but I think it was a useful clarification.
deleted 10y ago
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krallja 10y ago
So, would you call this a Snap pop?
sgwealti 10y ago
I'm a light snapchat user (send/receive ~100 snaps/week and post to my story every 3-4 days) and I have a question about its value as an advertising platform. I always skip the ads, and I don't know anyone else who uses snapchat who does't immediately skip the ads. When I do this, is it counted as an impression? I can't imagine advertisers would be happy to know that the ads can be skipped. Also I never use the Discover page and I don't know anyone who does. Yes, I'm one person and this is an anecdote but hopefully advertisers are getting valid engagement metrics.
- cspags 10y ago
  I've wondered this as well, but my guess is that they'll go the Youtube route and make the ads less and less skippable over time.
  - numbchuckskills 10y ago
    YouTube is going the opposite direction: http://www.post-gazette.com/business/tech-news/2017/02/21/Google-to-drop-non-skippable-ads-on-YouTube/stories/201702210008 http://www.post-gazette.com/business/tech-news/2017/02/21/Go...
- Emc2fma 10y ago
  From what I remember, those ads make up a small % of their revenue. Most of it is sponsored content, discovery channels, etc.
  - ehsankia 10y ago
    I know people who look at the discover section daily and read through all those articles in there...
- Kiro 10y ago
  > Also I never use the Discover page and I don't know anyone who does. I do all the time. Equally anecdotal but still.
- tannerc 10y ago
linuxkerneldev 10y ago
This $27.8 billion dollar valuation tells me that somewhere along the line, my job and lifestyle have caused me to detach from a significant chunk of society. I've never used Snap or their platform. I don't even really know what the benefit of their service. I am curious if I'm in the minority or if there's lots of developers like me who aren't able to comprehend these valuations.
- godzillabrennus 10y ago
  You are definitely not alone. The Snap product has been geared toward younger people as Facebook once positioned itself. Investors are betting that once the product and audience mature there will be huge payouts like they saw with Facebook. There is a big risk here though. Twitter has crashed and burned when compared to Facebook.
  - jmathai 10y ago
    I think it's worth noting that Twitter essentially lost to Facebook. Facebook's dominance pigeonholed and limited what Twitter could evolve to. And I'm not sure there's room for more than a couple social networks. I don't see who SnapChat will lose to besides themselves (i.e. monetization). IMO Facebook/Instagram isn't well positioned win today's 13-25 demographic. The point is, someone will win. And right now I'm not sure who else is in the running.
    - moolcool 10y ago
      I see Facebook as the email of this generation. It's not exciting, it doesn't change a whole lot, and virtually everybody has it. I think we're just seeing a lot of novelty, flash in the pan apps coming and going while Facebook maintains it's boring yet stable position.
      - komali2 10y ago
        Facebook is a better messaging platform than SMS, for me, because I have friends spread across the globe that I can contact with a simple internet connection.
zach417 10y ago
I don't understand how the existence of Snap adds over $30B of utility to the economy.
- deleted 10y ago
  [deleted]
- capkutay 10y ago
  > I don't understand how the existence of [any company ever] adds over [their current valuation] of utility to the economy; furthermore, if [company] fell of the face of the earth, everyone would just switch to [their competitor], and life would resume ut fit. Peter Thiel's quote should be updated: We wanted flying cars, instead we got 1̶4̶0̶ ̶c̶h̶a̶r̶a̶c̶t̶e̶r̶s [trivialization of product's value]. These comments surface every time a company goes public. You may have some valuable information driving this viewpoint underneath, but from this comment it just sounds like useless trolling. To me at least, Snap seems like a good company with cultish user-base. They have done a good job integrating ads and rich content (some paid content) into their core UX. A difficult feat which Twitter still hasn't solved to this day. They also have an interesting perspective on live events that even FB/Instagram has failed to replicate.
  - zach417 10y ago
    I had removed the last part from the comment as to seem less trollish, so please forgive me for coming across as such. Anyway, since you asked, here is my formalized argument: (1) [falsifiable axiom] You cannot have meaningful economic growth without technological innovation. Technological innovation is improving the efficiency of existing resources or increasing the availability of resources as compared to previous eras (colloquially, "doing more with less"). (2) [falsifiable axiom] Historically, only the most valuable companies of a given era are technologically innovative. (3) [falsifiable axiom] Under the current valuation, Snap Inc. is currently one of the most valuable companies. (4) [falsifiable axiom] Snap Inc. is not technologically innovative. (5) [logical conclusion given axioms] Snap Inc. should not be valued as one of the most valuable companies of this era.
    - 10y ago
InternetUser 10y ago
The stock is now showing up online: http://finance.yahoo.com/quote/SNAP http://finance.yahoo.com/quote/SNAP http://www.nasdaq.com/symbol/snap http://www.nasdaq.com/symbol/snap Not on Google Finance yet: https://www.google.com/finance?q=NYSE:SNAP https://www.google.com/finance?q=NYSE:SNAP
paglia_s 10y ago
As an user in their target age (18-24) I have to say that since Instagram started introducing features like stories and stickers the activity in my Snapchat has diminished enormously. I would say 50-70% less activity. I don't know if it's something specific to my social circle or more widespread but anyway it's been impressive
- edoceo 10y ago
  Your case matches with the three people ("melinials") I know who have used Snapchat.
  - hueving 10y ago
    Millennials actually covers much more than that and someone who is 18 now would likely not even be considered a Millennial. If you parent was a baby boomer, then you are a Millennial. https://en.wikipedia.org/wiki/Millennials https://en.wikipedia.org/wiki/Millennials
- Kratisto 10y ago
  Both my coworker and I are in the (23-26) range. All my friends (new city, college, and home) all use Snap religiously. All of her friends use Instagram. I think it's just hit or miss depending on the groups. A lot of my friends use Instagram as well. However, not for the story aspect.
- kilroy123 10y ago
  Plus facebook just rolled out the same feature on WhatsApp. Which has, what, 1 billion active users as well? Facebook is going full-throttle trying to compete against snap.
  - adventured 10y ago
    It's extremely clear that Facebook is setting itself up for an anti-trust action in the next few years. Their very aggressive leveraging of their near-monopoly in social to try to kill Snapchat, will be viewed in hindsight similar to Microsoft attacking Netscape with its OS position. If Facebook succeeds, it'll leave them with an overwhelming monopoly in social, there's no scenario under which they won't be pursued by the government thereafter. Plus, you can bet Snapchat and its investors will begin to howl loudly the harder Facebook presses. Zuckerberg's lust for market domination, will unravel or stagnate his kingdom if he's not very careful. His behavior at this point is looking ever more Gates-like when it comes to trying to knock-off the competition while possessing a near-monopoly (you can do one or the other, but if you're a $400b company and you try to both kill all your competition while having such a position, good luck).
aphextron 10y ago
This is going to open the floodgates for so many smaller startups that have been waiting to IPO. 2017 is going to be an exciting year for anyone with equity.
zachgersh 10y ago
My favorite tweet about the whole situation: https://twitter.com/objective_neo/status/736530568222015489 https://twitter.com/objective_neo/status/736530568222015489
- theparanoid 10y ago
  High tech has become more marketing and less tech.
  - komali2 10y ago
    Considering the state of the snapchat app on android, I absolutely agree.
    - da02 10y ago
      Can you elaborate on the state? (I never used SnapChat, but I am on Android.)
      - ambicapter 10y ago
        For one, I read in an HN thread that Snapchat Android doesn't actually use the camera API for the phone, it just screenshots the screen.
- donovanm 10y ago
  The amount it's valued at seriously blows my mind. Like this is an app that's main features are sending 10 second videos and images.
  - slackoverflower 10y ago
    Complexity does not correlate to value. All my friends use Snapchat and no one uses Facebook.
- Apocryphon 10y ago
  Maybe the future is in these over-glorified social media lifestyle companies acquiring or bailing out "worthy" startups working on "hard problems". Sort of like how ad-funded Google is investing in health longevity research and the like. The future is going to be funded from the largesse of dumb app companies, because the public would rather fund dumb app companies than rocket ship firms.
dovin 10y ago
Interesting. Bitcoin is trading at an all-time high today. I guess the fears of a tech bubble collapse have been staved off for a little while, at least.
- paulpauper 10y ago
  People have been predicting bubble and collapse since 2012...stopped clock theory
  - dovin 10y ago
    Of course, but it still is a good idea to think critically about the possibility that tech companies are seriously overvalued. The chance of a bubble bursting in any given year are probably low, but that there will be a downturn is inevitable. And when that does happen I'll want to be paying attention so I can see it coming as far out as possible.
mring33621 10y ago
I think it's generally appropriate to view events like this SNAP IPO as loudly hyped introductions of new vehicles for financial speculation. SNAP is a shiny new toy for traders and market-makers. We won't know how the public market truly values SNAP until, IMHO, maybe 12-24 months from now.
Symmetry 10y ago
Ouch, so they collect $1.4 billion less than they could have if they're priced their stock higher.
probe 10y ago
The SNAP thesis I like the best is - "Twitter-like growth with FB ARPU". The monetization potential of this company is massive (geofilters, sponsored content, hardware with spectacles, etc.) and there's no direct comp for that. Pokemon Go showed us the bleeding of digital to physical, and Snap has the potential to be the first company to unlock value from it (ex. geofilters). Plus you can view SNAP as a call option on AR and their potential to be the main camera (when something exciting happens, which app do you open first? For at least in my social circle its by far Snapchat not the Camera app/twitter/etc). That being said, they face a massive threat from Instagram Stories and now WhatsApp Stories. Though a caveat - while their DAU growth has slowed, it's actually been in international markets primarily (and I think wrongly they don't care enough about dealing with low-bandwith, "unexciting" users). If they can keep a healthy growth in US to escape the FB threat they can afford to lose internationally. Their first 1-2 earning report will be very revealing for SNAP b/c the expectations have been set and I'm looking for them to do the following: 1) Raise ARPU at similar rates 2) Maintain healthy DAU growth in the US 3) Create new product innovation around AR/Spectacles/Lenses. If they don't hit at least one of those goals (and preferably two or all three), than I would be very concerned for them.
- moolcool 10y ago
  >Pokemon Go showed us the bleeding of digital to physical It also showed how quickly a popular phenomenon can loose cultural relevance. >when something exciting happens, which app do you open first? One that doesn't automatically delete the photo I took of the exciting thing by default
  - probe 10y ago
    I'd argue it was poor/slow execution that led Pokemon Go to lose cultural relevance. If they had introduced more pokemon, ability to trade/battle, etc. they would still be highly relevant and a behemoth today. When I post to Stories I also post to "Memories" so everything is saved on the app. Plus I usually go back to snapchat and save pictures from my story manually if I want to have it saved locally. Most people I know do the same.
  - funnyfacts365 10y ago
yalogin 10y ago
I would only look at this stock after the first year. Having followed some of the previous high profile IPOs, we will see what happens after their employees are able to dump stock after the first year.
intrasight 10y ago
I can't help but think the title should be "Nude selfies startup IPO values firm at $20 billion"
- econner 10y ago
  Turns out people really want nude selfies.
  - intrasight 10y ago
    Many thousands of those (so I have heard) can be found on Tumblr. I think it means "people really want to take secure nude selfies".
kchoudhu 10y ago
Snap employees got screwed. http://www.businessinsider.com/antonio-garcia-martinez-chaos-monkeys-lessons-from-facebooks-ipo-for-snap-stock-pop-2017-3 http://www.businessinsider.com/antonio-garcia-martinez-chaos...
jboggan 10y ago
Santa Monica and Venice are going to get even more expensive in 6 months.
- fjdlwlv 10y ago
  Snap is now trying to grow out of Venice because they've already businified/gentrified/grown too much and are getting a lot of local hate
  - Apocryphon 10y ago
    Makes me wonder if Spiegel will bite the bullet and open up a SV office, like Tinder has.
    - sushid 10y ago
      Snap already has an SF office.
      - Apocryphon 10y ago
        Wait, where?!
- justinzollars 10y ago
  I'm just glad its not in San Francisco! Too much money lives here.
- teen 10y ago
  are they tho ?
  - jboggan 10y ago
    Brand new 2.65M condo units next door to me in Santa Monica. One immediately sold and I expect the rest to go as soon as all these paper millionaires in the neighborhood turn real. Venice has already turned into the most expensive rental market in LA [0] and it is dragging Santa Monica's prices up with it. I'm in a rent controlled apartment and I don't think I will move out of it at this rate unless I leave California entirely. 0 - http://www.laweekly.com/news/how-venice-became-the-most-expensive-neighborhood-in-los-angeles-7831779 http://www.laweekly.com/news/how-venice-became-the-most-expe...
miles_matthias 10y ago
Can we take a second to laugh at the guys wearing spectacles on the trading floor at 9am?
mtgx 10y ago
Hopefully now they have no excuse not to implement end-to-end encryption in their app.
synaesthesisx 10y ago
SNAP's real value lies in its future as an augmented reality company. They've spent something close to $1B in R&D - likely going toward hardware or something...
- catshirt 10y ago
  what gave it away? was it the VR hardware announcement they made a few months ago? :)
paulpauper 10y ago
Bought some shares this morning. With 30-40% profit margin and huge growth, imho this will go higher.
bronz 10y ago
>Shares opened at $24 and traded as high as $25.42 apiece Thursday, giving the company a market valuation of about $29 billion there is no way for me to look at that and not be dumbfounded. some companies are unprofitable but still have a clear mechanism through which they could make money. tesla sells cars, for example. twitter and snap on the other hand have no way to make enough money to justify the hype. they can sell peoples data -- and that is a form of revenue that may face massive backlash and cooling very soon. this market cap is insane and we are in a huge bubble.
bdrool 10y ago
For reference: - Snapchat is now worth nearly 10x Facebook's acquisition offer from 2013 - Snapchat is also worth ~1/14th of Facebook's worth - Snapchat is also worth somewhere in the range of 2-3x Twitter
unholiness 10y ago
Economics novice here. How did we get such a huge difference (40%!) between the IPO price and the current price, when both sides had $3.4 billion at stake on getting that price "right"? Is there some huge information disparity here? Moreover, if investors feel that $24 a share is a fair price, why weren't they swooping in before the IPO and, say, offering $20 a share for the whole chunk? Sorry if this seems like a ridiculous question, but it seems to me like there should be some extremely large free market force (on the order of $1.4 billion) preventing the founders and employees from missing out on all that money. Am I wrong?
- johnrob 10y ago
  If they priced the stock accurately, there would be a 50% chance the stock would go down on the first day. They want it to go up and thus under price it.
  - asher_ 10y ago
    Can someone explain this to me? If I own something, I want to sell it for as much as the market will bear. I don't want to sell it and have someone flip it for a huge margin almost immediately. How is a large first-day bump not considered a failure for an IPO? What is it about the situation that reverses a common sense understanding?
    - vecter 10y ago
      Perception and uncertainty. Humans are irrational emotional beings. Somethings feels hot because it popped on its first day trading from $18 to $24. Humans don't know the counterfactual, which is that the stock could have been initially priced at $30 and then dropped to $24. Both result in the exact same value of the company, but the first is definitely perceived as better. Also, it's hard to say what the "true" value of a stock or company is. In practice, it's what people are willing to pay for some shares of it, and we then as an industry standard take that last traded price, multiply it by the number of extant shares, and then come to a "market capitalization" value. So therefore, people depend on signals such as whether a stock goes up or down to determine whether or not it's hot, since people don't know what a "true" price for the stock really is anyway.
jedberg 10y ago
Looks like they are going to close with a market cap approximately three times that of Twitter...
- econner 10y ago
  It's interesting to compare the two IPOs. Twitter opened at $26 and closed at $44 at a valuation of $25bn. Twitter had $650M revenue in 2013 for EBITDA of -$525M. Snap closed at $28bn valuation, had $404M in revenue in 2016, and EBITDA of -$460M. Twitter had roughly 100M DAUs and 230M MAU whereas Snap has 150M DAU and over 300M MAU. Snap is also 2 years younger than Twitter was and the number of minutes spent on the platform per user is much higher. So, all the numbers are wacky and who knows.
Kazamai 10y ago
Ignorance is bliss in a world where half the people at YC could develop the core snap chat app in a week.
- nemothekid 10y ago
  You should have done it, and sold it for at least 100M then.
  - omarchowdhury 10y ago
    Yeah, well, we still haven't figured out time machines.
- InternetUser 10y ago
  This point was addressed on HN by user ChuckMcM in November 2013, right after Spiegel rejected Zuckerberg's buyout attempt: > The focus here is on the tech and not the market. A pet rock was 'worthless' (the rock was just a rock) but the connection with a generation was valuable. So often in our business we look at something that we feel like we could build (or could be easily built) and a valuation, and focus on those two things. The parts we don't see we give little value to (350M snaps? Seriously? That is a boat load of engagement). Making anything that get 350M 13-23 yr olds engaged is a pretty huge deal. That is what is valuable with Snapchat, not the tech. https://news.ycombinator.com/item?id=6671371 https://news.ycombinator.com/item?id=6671371
  - moolcool 10y ago
    The pet rock was also only on sale for about a year before being discontinued due to poor sales.
bojl 10y ago
A lot of the comments in this thread are missing the point. No one cares if you use Snapchat, no one cares if you like Snapchat. The question is how much market space can Snapchat occupy, and will their bets on new technology (VR, drones, etc) work out.
lobster_johnson 10y ago
Snap Interactive, which an unrelated company, also saw a bunch of trading due to the IPO [1]. I'm sure this kind of name confusion happens a lot. [1] http://finance.yahoo.com/chart/STVI http://finance.yahoo.com/chart/STVI
nkkollaw 10y ago
Can someone explain to me how Snap can be valued this much? I feel like I was asleep for 50 years and I just woke up and I have no idea how society works. Don't they make a little sexting app? What happened!
- quizbiz 10y ago
  https://www.sec.gov/Archives/edgar/data/1564408/000119312517029199/d270216ds1.htm https://www.sec.gov/Archives/edgar/data/1564408/000119312517...
  - nkkollaw 10y ago
    Not very helpful. This is in their timeline: "Lenses launch on Snapchat. Users barf rainbows for the first time". I feel even more confused.
kevando 10y ago
ITT: I don't have a Visa card, how can they be worth $1T?
- kilroy123 10y ago
  Well, VISA only has a $200 billion marketcap.
kapkapkap 10y ago
Can someone comment as to what kind of payday this IPO translates to for say the 30th engineer hired by Snap? (I realize that this is impossible to answer accurately, and that there is still a 4 month lockup)
- dvt 10y ago
  Interviewed with Snapchat about 3-4 years ago (sub-100 employees). Did not get an offer, but their interview process was pretty standard and professional. They were giving out 0.001% equity at the time. I'd say it would come out to 250k-500k, but it's very hard to extrapolate. They were already a mega hit with like 10 employees so I doubt anyone that hasn't been there super early (like first 5 employees) will become a millionaire off this IPO.
  - deleted 10y ago
    [deleted]
  - khazhou 10y ago
    Assuming the founders held 30%, the employee equity was 1/30,000th that of founders. I don't understand how engineers are ok with their boss getting 30,000X their compensation.
    - econner 10y ago
      Yea, I can't see it being this low either.
    - stanmancan 10y ago
      Because the engineer doesn't assume any risk assuming they're being paid market salary? The engineer can stop working when they clock out? The engineer doesn't have their own awesome idea? Or they don't have the desire to run their own company?
      - khazhou 10y ago
        There's certainly some types of startups where the risk rationale does apply. For example, the founders who went with zero pay for two years and got an early working version and happy customers before hiring their first employee. Yeah, those founders can justify their big percentage. But the Silicon Valley mold is: a couple of guys quit their jobs, hit up VCs for a month or two with the roughest sketch of an idea, get funded, and hire their first employee a couple of weeks later. That employee gets maybe 1% maximum, or the order of 1/50th or less of what the founders. Meanwhile, the engineer will bust his ass, show up at work every day and code some more at night, debug on weekends, etc. "We're all in this together, team!" Then on the happy day years later, the founders start pricing out their MacLarens, while the engineers blink "WTF" at their actual payout.
notadoc 10y ago
I can't help but remember this Frontline from 2002 https://www.youtube.com/watch?v=c4TlmkhE3Mw https://www.youtube.com/watch?v=c4TlmkhE3Mw Is Snapchat really worth more than CBS? More than Thomson Reuters? Intuit? HP? Nokia? Discover? EA? Why?
cwkoss 10y ago
I wonder how much child pornography goes through snapchat. Given the demographics of their users, I'd bet it's quite a lot. Seems like a pretty major business risk.
- adventured 10y ago
  You're incorrect, it's a near-zero business risk. The laws regarding how to deal with it are well developed at this point. Reddit, Imgur, Google, Facebook, Instagram, Viber, Kik, Gmail, Hotmail, Yahoo, Twitter etc - all have or have had a similar challenge in dealing with it in regards to scale, but in the case of Google or Facebook they're dealing with a drastically larger scale problem than Snapchat will ever see. All Snapchat has to do is follow the same laws that all the other hundreds of popular Internet companies do.
facepalm 10y ago
Is Snapchat strictly for entertainment, or is it also a way to stay up to date by following Tech influencers (like Twitter)?
gumby 10y ago
What is the justification for celebrating the big jump in first day price? Why isn't it a condemnation of the banks who got SNAP to leave a lot of money on the table?
23adominguez 10y ago
deez nuts ha i got yours
23adominguez 10y ago
deez nuts ha i got yours niga

263 points by rayuela 10y ago

Reminds me of Facebook IPO, a lot of people were claiming it will plunge and eventually go bankrupt. But companies with such big daily active audience that can be targeted with ads are here to stay.

jonknee 10y ago
Considering it went smoothly it doesn't remind me of Facebook's IPO at all. Twitter should be all the evidence you need of how hard it is to succeed selling advertising to a big audience. Snap might crush it, but I would give them a few earnings reports before comparing them to anyone.
- maxerickson 10y ago
  Facebook's market debut showed that Facebook did an excellent job controlling and pricing the IPO. Banks complaining -> Facebook and insiders won. This debut just shows that Snapchat wasn't in the driver's seat. Major holders are still mega wealthy though.
  - jonknee 10y ago
    No, it was a disaster that led to years of litigation. NASDAQ admitted it was their technical error and paid millions to settle lawsuits stemming from it. This obsession by techies that you're leaving money on the table if your shares go up after an IPO is bizarre.
    - maxerickson 10y ago
      It priced 2 or 3 billion dollars over the early valuation estimates (a few weeks before the $38 debut, the roadshow was floating $32 as the top number). It was a $30 million settlement.
    - ceejayoz 10y ago
      > This obsession by techies that you're leaving money on the table if your shares go up after an IPO is bizarre. How is it not leaving money on the table?
    - toast0 10y ago
      > This obsession by techies that you're leaving money on the table if your shares go up after an IPO is bizarre. If the company gets $X/share at the beginning of the day, and bankers get $X * 1.5/share at the end of the day, that feels like a big donation to Wall Street. If I'm an investor, I'd rather the company have all the capital than 2/3rds of the capital as well. It feels like if a company would sell a portion of the offering through the traditional channels, and the remainder at market prices throughout the first couple days of trading, it might better capture investment.
  - jedberg 10y ago
    > Major holders are still mega wealthy though. EDIT: I was wrong, that's just what they are selling today, not the total value of their shares. In which case, good for them! It actually surprised me how little the founders got. Their shares are worth about $400M each. Certainly nothing to sneeze at, but usually when you're the cofounder of a 24 billion dollar company, you're a billionaire. :)
    - jonknee 10y ago
      That's because they are keeping most of their shares: http://www.cnbc.com/2017/03/02/snap-ipo-what-evan-spiegel-bobby-murphy-will-make.html http://www.cnbc.com/2017/03/02/snap-ipo-what-evan-spiegel-bo... > According to Snap's latest S-1 filing with the SEC from Feb. 27, Spiegel and Murphy plan to sell 16 million shares each on Thursday. The company opened at $24, after it priced its public offering at $17 a share. It's just a small fraction of the number of shares the co-founders own in Snap Inc. Both men will still have 97,164,485 after Thursday's sale.
      - jedberg 10y ago
        Oh I read the same article but I read it wrong. I thought they meant that would be the total value of the shares they hold after the IPO, not just what they are selling today. My bad.
  - bduerst 10y ago
    Precisely. Facebook came out on top with their IPO by gaining more cash than expected, the average Joe did not because they lost cash.
- DougN7 10y ago
  Groupon was also similar if memory serves. My prediction is Snap will be the Myspace of 10 years from now.
  - chillydawg 10y ago
    Groupon was a totally different business. Network effect didn't really add anything or give them lock in. Customers and businesses would go wherever prices were lowest. It was always doomed, really.
ptrptr 10y ago
Especialy with such efficient ad sales people - https://mic.com/articles/170019/leaked-snapchat-emails-anti-gun-charity-told-to-pay-or-nra-ads-may-appear-on-videos#.DT4a1hUou https://mic.com/articles/170019/leaked-snapchat-emails-anti-...
monatron 10y ago
The Facebook IPO was a disaster and did stay below target for quite awhile post-IPO
- maxerickson 10y ago
  It was a glowing success for Facebook!
  - ryanmerket 10y ago
    Is that why they sued NASDAQ?
    - maxerickson 10y ago
      $1.4 billion pop on Snap publicly traded shares. $30 million lawsuit settlement awarded to Facebook.
- vostok 10y ago
  I'm not a banker so maybe I'm missing something, but I wouldn't be too happy if my company popped after the IPO. The way I see it, that just means that I left money on the table. If anything, this increases my respect for Zuckerberg and team. I'm not really excited about the prospect of bankers lining their favored clients' pockets with my money.
  - brangalinafoeva 10y ago
    Your company would have left money on the table, but not you as an equity holder.
    - vostok 10y ago
      It's not uncommon to sell your personal shares in the IPO. Even if you don't sell your own shares, selling 10% of the company at $5 billion (no pop) is strictly better than selling 10% of the company at $3 billion (assuming a 60% pop to $5 billion). The company has more money and you own the same portion of the company.
xienze 10y ago
Well the major difference between the two is that Facebook can engage grandma as well as junior. It has broad cross-generational appeal. The whole point of Snapchat is "mom and dad don't use it" which means they're beholden to the whims of a very young audience. Which I guess is good, since young people aren't known to move on to the next big thing at the drop of a hat.
- brangalinafoeva 10y ago
  Young people don't stay young forever.
- DougN7 10y ago
  > since young people aren't known to move on to the next big thing at the drop of a hat. I'm assuming that was said with a whole lot of sarcasm? In my opinion, that will be the death of Snap - something else new and shiny will come along in a year or two and Snap will be a ghost town.
  - xienze 10y ago
    Yes, plenty of sarcasm.
  - shimon_e 10y ago
    Bring in myspace.
ryanmerket 10y ago
>> But companies with such big daily active audience that can be targeted with ads are here to stay. That's just it. Snapchat has very little targeting data, and targeting is a force multiplier for ads revenue. They don't even have explicit gender data. Edit: Downvote all you want. They don't ask the users for gender. It's implied. See Twitter for a similar tactic.
- joshuamorton 10y ago
  They have extremely powerful targeting data: geolocation. Afaik, one of snap's biggest revenue sources is geolocked filters.
  - ryanmerket 10y ago
    How is that powerful? Any mobile app has geolocation data. How is that a market differentiator? That's like saying they have mobile OS targeting... So?
    - joshuamorton 10y ago
      Few other apps that I'm aware of provide live advertisements for events happening nearby as part of your natural use of the app in a really noninvasive way, and provide incentive to share those advertisements. Snapchat geofilters are non-invasive and will be seen in normal app use, but don't really bother you. They can inform you of events happening nearby or, if you're at an event, you can use the geofilter when snapping, which shows your friends that you endorse the event/product/whatever, in a totally transparent, opt-in way. That's super powerful.
InternetUser 10y ago
And that's not their only product: Bitmoji has been the #1 iPhone app overall since January 11, and it was already the #1 iPhone Utility app since July 22, 2016 (Log in to see) - https://www.appannie.com/apps/ios/app/bitmoji-keyboard-your-.. https://www.appannie.com/apps/ios/app/bitmoji-keyboard-your-.... https://www.appannie.com/apps/ios/top/united-states/overall/.. https://www.appannie.com/apps/ios/top/united-states/overall/.... And yesterday on eBay, 22 pairs of Spectacles were sold, with one pair went for $229 and 2 others went for $200 each, even though http://www.spectacles.com http://www.spectacles.com has been offering them for $130 since last Monday - http://www.ebay.com/sch/i.html?LH_Complete=1&LH_Sold=1&_from.. http://www.ebay.com/sch/i.html?LH_Complete=1&LH_Sold=1&_from.... Then there is the rumored Android Snap Phone: http://mashable.com/2017/02/14/snapchat-phone-concept-design.. http://mashable.com/2017/02/14/snapchat-phone-concept-design.... And Snap Drones, as reported on page 2 of today's NYTimes - https://www.nytimes.com/2017/02/28/technology/snapchat-drone.. https://www.nytimes.com/2017/02/28/technology/snapchat-drone.... http://i.imgur.com/6Nl0Ymq.jpg http://i.imgur.com/6Nl0Ymq.jpg

doc_holliday 10y ago

I know that the Snapchat platform is worth something, it has high engagement and adoption of 18-24 year old age segment, and that is worth a lot in terms of attention and advertising $s. However, this just feels completely out of proportion to earnings and downside does not seem priced in. Willing to be proved wrong of course, but especially seeing as they are non voting shares, I cannot understand this pricing.

empath75 10y ago
FOMO. And the market is really frothy in general right now.
- komali2 10y ago
  For some reason whenever people use the word "frothy" to describe something, I gag slightly.
  - knicholes 10y ago
    Probably it's from the maturation clinic you took in school where they covered STIs. That and "cheesy."
    - komali2 10y ago
      Nah as a Wisconsite "cheesy" just describes the natural state of food for me ;P
23443463453 10y ago
It makes absolutely zero sense to me too, but what do I know, other than that the idea seems to be that snapchat, like Facebook before it, is seen as the drug that compels today's generations. It was newspapers, radio, and TV before and now it's Snapchat after Facebook. At least I think that's the reasoning. If you can capture people's minds and compel them to put real money into people's pockets, then you can capture the whole of society. If you think about it, we are somewhat still in an equivalent world where there were only a few radio or TV stations, i.e., Facebook, Google Ads, Snapchat, etc. who command the minds of ever more people in the world. It's a de facto cartel monopolized market not unlike the Robber Baron period of American history, where few dominated the vast majority of economic activity with their stranglehold. Unfortunately, due to the inherent network effect of the internet and technology, it will only ever increasingly become a race for who can steal away the vast majority of human minds of the ever increasing digital human herd. Snapchat will have its day as Facebook starts atrophying and contracting as people shift to Snapchat, then something else will come to poach away a future generation that is then ridden to poach away minds from Snapchat. It will be an ever repeating cycle of one company stealing away the vast majority of minds from the last company. At least as long as certain conditions are true.

pibefision 10y ago

Reminds me of Twitter IPO... just wait.

moolcool 10y ago
I think this will be worse. Snapchat isn't nearly as culturally sticky as Twitter. Sites like Twitter, Instagram, and Facebook have a robust friend/follower system, and users have a huge backlog of things they contributed to the platforms. No contributions on Snapchat last more than a single day, so what is motivating users to stay on the platform instead of using Facebook or Instagram's offerings? Their friends lists exist both of those places too. In 10 years we'll look back on Snapchat as a flash in the pan.
- briantmaurer 10y ago
  This isn't entirely true – Snapchat already has features that let you save content permanently.
- jeffbax 10y ago
  I think Snap has potential to be huge… anything that wins the race to replace TV is going to be big. Whether they can do it before FB clones them/leverages their network is a big open question. That said, despite the fact that I love Twitter more than any other network, almost none of my friends use it maybe ~a dozen people I know closely in real life still post to it. Almost all of my friends use Snapchat and complain about my lack of engagement with it. Anecdotal, but I don't think they are comparable… additionally if your (likely closer nit group of vs. FB's "everyone you know") friends aren't posting, brands are putting up a TON that people seem to really like.
  - moolcool 10y ago
    Snap is the last thing that would replace TV. Nobody sits down and spends a consecutive hour on Snapchat
    - sgnl 10y ago

onion2k 10y ago

I wonder how much of this is investors with a good understanding of Snap's potential buying because they feel it's a good gamble versus stock market investors not having many opportunities to invest in tech startups because there's so few IPOs.

chollida1 10y ago

I'm happy for the NYSE that this went well. SNAP has done some pretty large volume so far with no problems. Interestingly enough, well atleast to someone who cares about the cash equity markets, the NYSE actually did a test run last week to try and simulate the chaos that occurs during any hot IPO. So now we know that there is atleast some appetite for shares with no controlling interest and no indication of paying out a dividend any time soon. A current market cap of 30 Billion is a pretty darn big accomplishment! Two big dates in the future to look out for....... 1) July 30 when the first lockup date is over. I'm not sure how many shares come off restriction. 2) May 15 when they do their first earnings report. I'm interested to see if they try and make people view the company via GAAP accounting(PnL) or non GAAP measures like engagement, monthly users, etc.

gregshap 10y ago
GAAP vs non GAAP accounting refers to how you calculate PnL, not whether you use things unrelated to accounting to hint that you are growing and might make money in the future. You can definitely use strict GAAP accounting and also brag that users are super duper engaged.
- chollida1 10y ago
  I think you are being more than a bit pedantic for very little benefit. I never said "Non Gaap accounting", I said "Non Gaap measures". That doesn't have to mean Pnl, it can, and was intended, to mean things like user engagement numbers, monthly uniques, etc. Is there a different terminology that you would prefer that I use? how about this........ I'm interested in seeing whether they focus on their earnings vs user growth numbers. Would this satisfy you?
  - dmoy 10y ago
    I for one appreciated Greg's note and your follow-up. When you said non gaap initially I thought you explicitly meant the non gaap but still accounting systems that a large, large number of companies out on quarterly earnings (they'll do it right next to it, say " gaap X, non gaap Y ". So you may see it as pedantic, but I think it was a useful clarification.

deleted 10y ago

[deleted]

krallja 10y ago

So, would you call this a Snap pop?

sgwealti 10y ago

I'm a light snapchat user (send/receive ~100 snaps/week and post to my story every 3-4 days) and I have a question about its value as an advertising platform. I always skip the ads, and I don't know anyone else who uses snapchat who does't immediately skip the ads. When I do this, is it counted as an impression? I can't imagine advertisers would be happy to know that the ads can be skipped. Also I never use the Discover page and I don't know anyone who does. Yes, I'm one person and this is an anecdote but hopefully advertisers are getting valid engagement metrics.

cspags 10y ago
I've wondered this as well, but my guess is that they'll go the Youtube route and make the ads less and less skippable over time.
- numbchuckskills 10y ago
  YouTube is going the opposite direction: http://www.post-gazette.com/business/tech-news/2017/02/21/Google-to-drop-non-skippable-ads-on-YouTube/stories/201702210008 http://www.post-gazette.com/business/tech-news/2017/02/21/Go...
Emc2fma 10y ago
From what I remember, those ads make up a small % of their revenue. Most of it is sponsored content, discovery channels, etc.
- ehsankia 10y ago
  I know people who look at the discover section daily and read through all those articles in there...
Kiro 10y ago
> Also I never use the Discover page and I don't know anyone who does. I do all the time. Equally anecdotal but still.
tannerc 10y ago

linuxkerneldev 10y ago

This $27.8 billion dollar valuation tells me that somewhere along the line, my job and lifestyle have caused me to detach from a significant chunk of society. I've never used Snap or their platform. I don't even really know what the benefit of their service. I am curious if I'm in the minority or if there's lots of developers like me who aren't able to comprehend these valuations.

godzillabrennus 10y ago
You are definitely not alone. The Snap product has been geared toward younger people as Facebook once positioned itself. Investors are betting that once the product and audience mature there will be huge payouts like they saw with Facebook. There is a big risk here though. Twitter has crashed and burned when compared to Facebook.
- jmathai 10y ago
  I think it's worth noting that Twitter essentially lost to Facebook. Facebook's dominance pigeonholed and limited what Twitter could evolve to. And I'm not sure there's room for more than a couple social networks. I don't see who SnapChat will lose to besides themselves (i.e. monetization). IMO Facebook/Instagram isn't well positioned win today's 13-25 demographic. The point is, someone will win. And right now I'm not sure who else is in the running.
  - moolcool 10y ago
    I see Facebook as the email of this generation. It's not exciting, it doesn't change a whole lot, and virtually everybody has it. I think we're just seeing a lot of novelty, flash in the pan apps coming and going while Facebook maintains it's boring yet stable position.
    - komali2 10y ago
      Facebook is a better messaging platform than SMS, for me, because I have friends spread across the globe that I can contact with a simple internet connection.

zach417 10y ago

I don't understand how the existence of Snap adds over $30B of utility to the economy.

deleted 10y ago
[deleted]
capkutay 10y ago
> I don't understand how the existence of [any company ever] adds over [their current valuation] of utility to the economy; furthermore, if [company] fell of the face of the earth, everyone would just switch to [their competitor], and life would resume ut fit. Peter Thiel's quote should be updated: We wanted flying cars, instead we got 1̶4̶0̶ ̶c̶h̶a̶r̶a̶c̶t̶e̶r̶s [trivialization of product's value]. These comments surface every time a company goes public. You may have some valuable information driving this viewpoint underneath, but from this comment it just sounds like useless trolling. To me at least, Snap seems like a good company with cultish user-base. They have done a good job integrating ads and rich content (some paid content) into their core UX. A difficult feat which Twitter still hasn't solved to this day. They also have an interesting perspective on live events that even FB/Instagram has failed to replicate.
- zach417 10y ago
  I had removed the last part from the comment as to seem less trollish, so please forgive me for coming across as such. Anyway, since you asked, here is my formalized argument: (1) [falsifiable axiom] You cannot have meaningful economic growth without technological innovation. Technological innovation is improving the efficiency of existing resources or increasing the availability of resources as compared to previous eras (colloquially, "doing more with less"). (2) [falsifiable axiom] Historically, only the most valuable companies of a given era are technologically innovative. (3) [falsifiable axiom] Under the current valuation, Snap Inc. is currently one of the most valuable companies. (4) [falsifiable axiom] Snap Inc. is not technologically innovative. (5) [logical conclusion given axioms] Snap Inc. should not be valued as one of the most valuable companies of this era.
  - 10y ago

InternetUser 10y ago

The stock is now showing up online: http://finance.yahoo.com/quote/SNAP http://finance.yahoo.com/quote/SNAP http://www.nasdaq.com/symbol/snap http://www.nasdaq.com/symbol/snap Not on Google Finance yet: https://www.google.com/finance?q=NYSE:SNAP https://www.google.com/finance?q=NYSE:SNAP

paglia_s 10y ago

As an user in their target age (18-24) I have to say that since Instagram started introducing features like stories and stickers the activity in my Snapchat has diminished enormously. I would say 50-70% less activity. I don't know if it's something specific to my social circle or more widespread but anyway it's been impressive

edoceo 10y ago
Your case matches with the three people ("melinials") I know who have used Snapchat.
- hueving 10y ago
  Millennials actually covers much more than that and someone who is 18 now would likely not even be considered a Millennial. If you parent was a baby boomer, then you are a Millennial. https://en.wikipedia.org/wiki/Millennials https://en.wikipedia.org/wiki/Millennials
Kratisto 10y ago
Both my coworker and I are in the (23-26) range. All my friends (new city, college, and home) all use Snap religiously. All of her friends use Instagram. I think it's just hit or miss depending on the groups. A lot of my friends use Instagram as well. However, not for the story aspect.
kilroy123 10y ago
Plus facebook just rolled out the same feature on WhatsApp. Which has, what, 1 billion active users as well? Facebook is going full-throttle trying to compete against snap.
- adventured 10y ago
  It's extremely clear that Facebook is setting itself up for an anti-trust action in the next few years. Their very aggressive leveraging of their near-monopoly in social to try to kill Snapchat, will be viewed in hindsight similar to Microsoft attacking Netscape with its OS position. If Facebook succeeds, it'll leave them with an overwhelming monopoly in social, there's no scenario under which they won't be pursued by the government thereafter. Plus, you can bet Snapchat and its investors will begin to howl loudly the harder Facebook presses. Zuckerberg's lust for market domination, will unravel or stagnate his kingdom if he's not very careful. His behavior at this point is looking ever more Gates-like when it comes to trying to knock-off the competition while possessing a near-monopoly (you can do one or the other, but if you're a $400b company and you try to both kill all your competition while having such a position, good luck).

aphextron 10y ago

This is going to open the floodgates for so many smaller startups that have been waiting to IPO. 2017 is going to be an exciting year for anyone with equity.

zachgersh 10y ago

My favorite tweet about the whole situation: https://twitter.com/objective_neo/status/736530568222015489 https://twitter.com/objective_neo/status/736530568222015489

theparanoid 10y ago
High tech has become more marketing and less tech.
- komali2 10y ago
  Considering the state of the snapchat app on android, I absolutely agree.
  - da02 10y ago
    Can you elaborate on the state? (I never used SnapChat, but I am on Android.)
    - ambicapter 10y ago
      For one, I read in an HN thread that Snapchat Android doesn't actually use the camera API for the phone, it just screenshots the screen.
donovanm 10y ago
The amount it's valued at seriously blows my mind. Like this is an app that's main features are sending 10 second videos and images.
- slackoverflower 10y ago
  Complexity does not correlate to value. All my friends use Snapchat and no one uses Facebook.
Apocryphon 10y ago
Maybe the future is in these over-glorified social media lifestyle companies acquiring or bailing out "worthy" startups working on "hard problems". Sort of like how ad-funded Google is investing in health longevity research and the like. The future is going to be funded from the largesse of dumb app companies, because the public would rather fund dumb app companies than rocket ship firms.

dovin 10y ago

Interesting. Bitcoin is trading at an all-time high today. I guess the fears of a tech bubble collapse have been staved off for a little while, at least.

paulpauper 10y ago
People have been predicting bubble and collapse since 2012...stopped clock theory
- dovin 10y ago
  Of course, but it still is a good idea to think critically about the possibility that tech companies are seriously overvalued. The chance of a bubble bursting in any given year are probably low, but that there will be a downturn is inevitable. And when that does happen I'll want to be paying attention so I can see it coming as far out as possible.

mring33621 10y ago

I think it's generally appropriate to view events like this SNAP IPO as loudly hyped introductions of new vehicles for financial speculation. SNAP is a shiny new toy for traders and market-makers. We won't know how the public market truly values SNAP until, IMHO, maybe 12-24 months from now.

Symmetry 10y ago

Ouch, so they collect $1.4 billion less than they could have if they're priced their stock higher.

probe 10y ago

The SNAP thesis I like the best is - "Twitter-like growth with FB ARPU". The monetization potential of this company is massive (geofilters, sponsored content, hardware with spectacles, etc.) and there's no direct comp for that. Pokemon Go showed us the bleeding of digital to physical, and Snap has the potential to be the first company to unlock value from it (ex. geofilters). Plus you can view SNAP as a call option on AR and their potential to be the main camera (when something exciting happens, which app do you open first? For at least in my social circle its by far Snapchat not the Camera app/twitter/etc). That being said, they face a massive threat from Instagram Stories and now WhatsApp Stories. Though a caveat - while their DAU growth has slowed, it's actually been in international markets primarily (and I think wrongly they don't care enough about dealing with low-bandwith, "unexciting" users). If they can keep a healthy growth in US to escape the FB threat they can afford to lose internationally. Their first 1-2 earning report will be very revealing for SNAP b/c the expectations have been set and I'm looking for them to do the following: 1) Raise ARPU at similar rates 2) Maintain healthy DAU growth in the US 3) Create new product innovation around AR/Spectacles/Lenses. If they don't hit at least one of those goals (and preferably two or all three), than I would be very concerned for them.

moolcool 10y ago
>Pokemon Go showed us the bleeding of digital to physical It also showed how quickly a popular phenomenon can loose cultural relevance. >when something exciting happens, which app do you open first? One that doesn't automatically delete the photo I took of the exciting thing by default
- probe 10y ago
  I'd argue it was poor/slow execution that led Pokemon Go to lose cultural relevance. If they had introduced more pokemon, ability to trade/battle, etc. they would still be highly relevant and a behemoth today. When I post to Stories I also post to "Memories" so everything is saved on the app. Plus I usually go back to snapchat and save pictures from my story manually if I want to have it saved locally. Most people I know do the same.
- funnyfacts365 10y ago

yalogin 10y ago

I would only look at this stock after the first year. Having followed some of the previous high profile IPOs, we will see what happens after their employees are able to dump stock after the first year.

intrasight 10y ago

I can't help but think the title should be "Nude selfies startup IPO values firm at $20 billion"

econner 10y ago
Turns out people really want nude selfies.
- intrasight 10y ago
  Many thousands of those (so I have heard) can be found on Tumblr. I think it means "people really want to take secure nude selfies".

kchoudhu 10y ago

Snap employees got screwed. http://www.businessinsider.com/antonio-garcia-martinez-chaos-monkeys-lessons-from-facebooks-ipo-for-snap-stock-pop-2017-3 http://www.businessinsider.com/antonio-garcia-martinez-chaos...

jboggan 10y ago

Santa Monica and Venice are going to get even more expensive in 6 months.

fjdlwlv 10y ago
Snap is now trying to grow out of Venice because they've already businified/gentrified/grown too much and are getting a lot of local hate
- Apocryphon 10y ago
  Makes me wonder if Spiegel will bite the bullet and open up a SV office, like Tinder has.
  - sushid 10y ago
    Snap already has an SF office.
    - Apocryphon 10y ago
      Wait, where?!
justinzollars 10y ago
I'm just glad its not in San Francisco! Too much money lives here.
teen 10y ago
are they tho ?
- jboggan 10y ago
  Brand new 2.65M condo units next door to me in Santa Monica. One immediately sold and I expect the rest to go as soon as all these paper millionaires in the neighborhood turn real. Venice has already turned into the most expensive rental market in LA [0] and it is dragging Santa Monica's prices up with it. I'm in a rent controlled apartment and I don't think I will move out of it at this rate unless I leave California entirely. 0 - http://www.laweekly.com/news/how-venice-became-the-most-expensive-neighborhood-in-los-angeles-7831779 http://www.laweekly.com/news/how-venice-became-the-most-expe...

miles_matthias 10y ago

Can we take a second to laugh at the guys wearing spectacles on the trading floor at 9am?

mtgx 10y ago

Hopefully now they have no excuse not to implement end-to-end encryption in their app.

synaesthesisx 10y ago

SNAP's real value lies in its future as an augmented reality company. They've spent something close to $1B in R&D - likely going toward hardware or something...

catshirt 10y ago
what gave it away? was it the VR hardware announcement they made a few months ago? :)

paulpauper 10y ago

Bought some shares this morning. With 30-40% profit margin and huge growth, imho this will go higher.

bronz 10y ago

>Shares opened at $24 and traded as high as $25.42 apiece Thursday, giving the company a market valuation of about $29 billion there is no way for me to look at that and not be dumbfounded. some companies are unprofitable but still have a clear mechanism through which they could make money. tesla sells cars, for example. twitter and snap on the other hand have no way to make enough money to justify the hype. they can sell peoples data -- and that is a form of revenue that may face massive backlash and cooling very soon. this market cap is insane and we are in a huge bubble.

bdrool 10y ago

For reference: - Snapchat is now worth nearly 10x Facebook's acquisition offer from 2013 - Snapchat is also worth ~1/14th of Facebook's worth - Snapchat is also worth somewhere in the range of 2-3x Twitter

unholiness 10y ago

Economics novice here. How did we get such a huge difference (40%!) between the IPO price and the current price, when both sides had $3.4 billion at stake on getting that price "right"? Is there some huge information disparity here? Moreover, if investors feel that $24 a share is a fair price, why weren't they swooping in before the IPO and, say, offering $20 a share for the whole chunk? Sorry if this seems like a ridiculous question, but it seems to me like there should be some extremely large free market force (on the order of $1.4 billion) preventing the founders and employees from missing out on all that money. Am I wrong?

johnrob 10y ago
If they priced the stock accurately, there would be a 50% chance the stock would go down on the first day. They want it to go up and thus under price it.
- asher_ 10y ago
  Can someone explain this to me? If I own something, I want to sell it for as much as the market will bear. I don't want to sell it and have someone flip it for a huge margin almost immediately. How is a large first-day bump not considered a failure for an IPO? What is it about the situation that reverses a common sense understanding?
  - vecter 10y ago
    Perception and uncertainty. Humans are irrational emotional beings. Somethings feels hot because it popped on its first day trading from $18 to $24. Humans don't know the counterfactual, which is that the stock could have been initially priced at $30 and then dropped to $24. Both result in the exact same value of the company, but the first is definitely perceived as better. Also, it's hard to say what the "true" value of a stock or company is. In practice, it's what people are willing to pay for some shares of it, and we then as an industry standard take that last traded price, multiply it by the number of extant shares, and then come to a "market capitalization" value. So therefore, people depend on signals such as whether a stock goes up or down to determine whether or not it's hot, since people don't know what a "true" price for the stock really is anyway.

jedberg 10y ago

Looks like they are going to close with a market cap approximately three times that of Twitter...

econner 10y ago
It's interesting to compare the two IPOs. Twitter opened at $26 and closed at $44 at a valuation of $25bn. Twitter had $650M revenue in 2013 for EBITDA of -$525M. Snap closed at $28bn valuation, had $404M in revenue in 2016, and EBITDA of -$460M. Twitter had roughly 100M DAUs and 230M MAU whereas Snap has 150M DAU and over 300M MAU. Snap is also 2 years younger than Twitter was and the number of minutes spent on the platform per user is much higher. So, all the numbers are wacky and who knows.

Kazamai 10y ago

Ignorance is bliss in a world where half the people at YC could develop the core snap chat app in a week.

nemothekid 10y ago
You should have done it, and sold it for at least 100M then.
- omarchowdhury 10y ago
  Yeah, well, we still haven't figured out time machines.
InternetUser 10y ago
This point was addressed on HN by user ChuckMcM in November 2013, right after Spiegel rejected Zuckerberg's buyout attempt: > The focus here is on the tech and not the market. A pet rock was 'worthless' (the rock was just a rock) but the connection with a generation was valuable. So often in our business we look at something that we feel like we could build (or could be easily built) and a valuation, and focus on those two things. The parts we don't see we give little value to (350M snaps? Seriously? That is a boat load of engagement). Making anything that get 350M 13-23 yr olds engaged is a pretty huge deal. That is what is valuable with Snapchat, not the tech. https://news.ycombinator.com/item?id=6671371 https://news.ycombinator.com/item?id=6671371
- moolcool 10y ago
  The pet rock was also only on sale for about a year before being discontinued due to poor sales.

bojl 10y ago

A lot of the comments in this thread are missing the point. No one cares if you use Snapchat, no one cares if you like Snapchat. The question is how much market space can Snapchat occupy, and will their bets on new technology (VR, drones, etc) work out.

lobster_johnson 10y ago

Snap Interactive, which an unrelated company, also saw a bunch of trading due to the IPO [1]. I'm sure this kind of name confusion happens a lot. [1] http://finance.yahoo.com/chart/STVI http://finance.yahoo.com/chart/STVI

nkkollaw 10y ago

Can someone explain to me how Snap can be valued this much? I feel like I was asleep for 50 years and I just woke up and I have no idea how society works. Don't they make a little sexting app? What happened!

quizbiz 10y ago
https://www.sec.gov/Archives/edgar/data/1564408/000119312517029199/d270216ds1.htm https://www.sec.gov/Archives/edgar/data/1564408/000119312517...
- nkkollaw 10y ago
  Not very helpful. This is in their timeline: "Lenses launch on Snapchat. Users barf rainbows for the first time". I feel even more confused.

kevando 10y ago

ITT: I don't have a Visa card, how can they be worth $1T?

kilroy123 10y ago
Well, VISA only has a $200 billion marketcap.

kapkapkap 10y ago

Can someone comment as to what kind of payday this IPO translates to for say the 30th engineer hired by Snap? (I realize that this is impossible to answer accurately, and that there is still a 4 month lockup)

dvt 10y ago
Interviewed with Snapchat about 3-4 years ago (sub-100 employees). Did not get an offer, but their interview process was pretty standard and professional. They were giving out 0.001% equity at the time. I'd say it would come out to 250k-500k, but it's very hard to extrapolate. They were already a mega hit with like 10 employees so I doubt anyone that hasn't been there super early (like first 5 employees) will become a millionaire off this IPO.
- deleted 10y ago
  [deleted]
- khazhou 10y ago
  Assuming the founders held 30%, the employee equity was 1/30,000th that of founders. I don't understand how engineers are ok with their boss getting 30,000X their compensation.
  - econner 10y ago
    Yea, I can't see it being this low either.
  - stanmancan 10y ago
    Because the engineer doesn't assume any risk assuming they're being paid market salary? The engineer can stop working when they clock out? The engineer doesn't have their own awesome idea? Or they don't have the desire to run their own company?
    - khazhou 10y ago
      There's certainly some types of startups where the risk rationale does apply. For example, the founders who went with zero pay for two years and got an early working version and happy customers before hiring their first employee. Yeah, those founders can justify their big percentage. But the Silicon Valley mold is: a couple of guys quit their jobs, hit up VCs for a month or two with the roughest sketch of an idea, get funded, and hire their first employee a couple of weeks later. That employee gets maybe 1% maximum, or the order of 1/50th or less of what the founders. Meanwhile, the engineer will bust his ass, show up at work every day and code some more at night, debug on weekends, etc. "We're all in this together, team!" Then on the happy day years later, the founders start pricing out their MacLarens, while the engineers blink "WTF" at their actual payout.

notadoc 10y ago

I can't help but remember this Frontline from 2002 https://www.youtube.com/watch?v=c4TlmkhE3Mw https://www.youtube.com/watch?v=c4TlmkhE3Mw Is Snapchat really worth more than CBS? More than Thomson Reuters? Intuit? HP? Nokia? Discover? EA? Why?

cwkoss 10y ago

I wonder how much child pornography goes through snapchat. Given the demographics of their users, I'd bet it's quite a lot. Seems like a pretty major business risk.

adventured 10y ago
You're incorrect, it's a near-zero business risk. The laws regarding how to deal with it are well developed at this point. Reddit, Imgur, Google, Facebook, Instagram, Viber, Kik, Gmail, Hotmail, Yahoo, Twitter etc - all have or have had a similar challenge in dealing with it in regards to scale, but in the case of Google or Facebook they're dealing with a drastically larger scale problem than Snapchat will ever see. All Snapchat has to do is follow the same laws that all the other hundreds of popular Internet companies do.

facepalm 10y ago

Is Snapchat strictly for entertainment, or is it also a way to stay up to date by following Tech influencers (like Twitter)?

gumby 10y ago

What is the justification for celebrating the big jump in first day price? Why isn't it a condemnation of the banks who got SNAP to leave a lot of money on the table?

23adominguez 10y ago

deez nuts ha i got yours

23adominguez 10y ago

deez nuts ha i got yours niga