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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

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.
  - gregshap 10y ago
    Yup i think 'earnings vs user growth numbers' is a great way to put it My thinking was that 'People worried about money losing companies with huge valuations' is a popular cause of consternation and 'People worried about non-GAAP accounting' is another popular (for some people) cause of consternation. Gaap(Pnl) vs non-gaap made me suspect you were conflating the two worries, and made me wonder if lots of people might also be confused by what accounting/finance/investment people are generally talking about when they talk about "Non-GAAP measures"
    - dsktoo 10y ago
      Agree. As a person in accounting/finance/investment, measures like user growth are called KPIs (key performance indicators) and are distinct from NGFMs (non-GAAP financial measures).
pm90 10y ago
> 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! This is really disturbing. I don't know if its an indicator of too much money in the market, or just the fact that the market itself has expanded so much. Why would investors be OK with losing power?
- trjordan 10y ago
  For the same reason 50% of the US didn't vote in the last election. Or employees don't demand to view board decks. Most investors are buying as a way to make money off of continued success. They don't want to control the business or make decisions, and even if they did, they don't want to invest enough to make a dent in the normal 1-share-1-vote sort of model. They're looking the company and hooking their accounts to its success. In the public markets, most investors aren't in it for the control, they're in it for the returns.
  - slezakattack 10y ago
    I think you have an interesting point but I disagree with your analogy of a presidential election. The motivations for voting in a presidential election are not always financial (even though future policies could very well determine your own financial outlook..). I think you're right about investors are in it for the returns but having control can help steer your returns. If everybody thinks the CEO is not increasing shareholder value, you vote to remove said CEO. This is not always positive either as many investors want quick returns and not always have patience for visionaries..
    - trjordan 10y ago
      I guess my point was more that at some scale, it feels worthless to vote at all. If I disagree with Snap's CEO, my $500 of stock feels about like my vote in the presidential election. I doubt my input changes the course of anything. There's a good reason to exert control in both cases, but for many, it feels futile to do so.
ChuckMcM 10y ago
They had a pretty large participating contribution (50M shares as I recall) so that is a bunch of money that paid off some folks who might have been skittish. I was surprised to see as large a bounce as there was. And it has no doubt realigned the world view of a bunch of Snapchat employees[1]. To your last point I can't imagine they are going to talk earnings in a GAAP context unless they are generating lots of free cash flow as Google does. [1] If you're an employee and reading this and thinking "I'm rich! Quick go buy a Lamborghini!" I caution you to wait until you've not only exercised the shares and paid tax on them, but you have sold the shares and that sale has 'settled' and you have the money in your brokerage account.
- econner 10y ago
  > They had a pretty large participating contribution (50M shares as I recall) so that is a bunch of money that paid off some folks who might have been skittish. Could you explain what this means a little more? What is a participating contribution in this context? Are these shares employees were able to sell in the IPO?
  - ChuckMcM 10y ago
    The s1 listed 50m shares as coming from existing share holders but they did not break it out. Usually that is employees with vested shares and occasionally other investors. Was more common in the dot com IPO's but Zynga did that too as I recall
    - econner 10y ago
      Ah ok, so the company makes an exception to the lockup period for IPO participation? How do they typically decide who gets to participate?
      - ChuckMcM 10y ago
        Its a negotiation that happens with the bank that is taking the company public. They are trading off the 'optics' of a bunch of people selling their stake at the IPO vs value. The lockup period for executive (officers) and non-officers is also negotiated. The bankers want to strike a balance between employees (especially officers) who have concerns about being whipsawed with the stock price and the perception that they feel the company will grow in value over time so holding the stock is a "good" investment.
username223 10y ago
> 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. Not to mention their $500 million net loss last year. There are cheaper cash incinerators. > 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. There's no doubt in my mind -- they'll pull some social flim-flam for as long as they can. The whole thing is just nuts. No one's going to buy them now, and their pivot to becoming a "camera company" has yielded an even uglier version of Google Glass. Man, this surveillance economy bubble feels so close to bursting...

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.
- gregshap 10y ago
  Yup i think 'earnings vs user growth numbers' is a great way to put it My thinking was that 'People worried about money losing companies with huge valuations' is a popular cause of consternation and 'People worried about non-GAAP accounting' is another popular (for some people) cause of consternation. Gaap(Pnl) vs non-gaap made me suspect you were conflating the two worries, and made me wonder if lots of people might also be confused by what accounting/finance/investment people are generally talking about when they talk about "Non-GAAP measures"
  - dsktoo 10y ago
    Agree. As a person in accounting/finance/investment, measures like user growth are called KPIs (key performance indicators) and are distinct from NGFMs (non-GAAP financial measures).

pm90 10y ago

> 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! This is really disturbing. I don't know if its an indicator of too much money in the market, or just the fact that the market itself has expanded so much. Why would investors be OK with losing power?

trjordan 10y ago
For the same reason 50% of the US didn't vote in the last election. Or employees don't demand to view board decks. Most investors are buying as a way to make money off of continued success. They don't want to control the business or make decisions, and even if they did, they don't want to invest enough to make a dent in the normal 1-share-1-vote sort of model. They're looking the company and hooking their accounts to its success. In the public markets, most investors aren't in it for the control, they're in it for the returns.
- slezakattack 10y ago
  I think you have an interesting point but I disagree with your analogy of a presidential election. The motivations for voting in a presidential election are not always financial (even though future policies could very well determine your own financial outlook..). I think you're right about investors are in it for the returns but having control can help steer your returns. If everybody thinks the CEO is not increasing shareholder value, you vote to remove said CEO. This is not always positive either as many investors want quick returns and not always have patience for visionaries..
  - trjordan 10y ago
    I guess my point was more that at some scale, it feels worthless to vote at all. If I disagree with Snap's CEO, my $500 of stock feels about like my vote in the presidential election. I doubt my input changes the course of anything. There's a good reason to exert control in both cases, but for many, it feels futile to do so.

ChuckMcM 10y ago

They had a pretty large participating contribution (50M shares as I recall) so that is a bunch of money that paid off some folks who might have been skittish. I was surprised to see as large a bounce as there was. And it has no doubt realigned the world view of a bunch of Snapchat employees[1]. To your last point I can't imagine they are going to talk earnings in a GAAP context unless they are generating lots of free cash flow as Google does. [1] If you're an employee and reading this and thinking "I'm rich! Quick go buy a Lamborghini!" I caution you to wait until you've not only exercised the shares and paid tax on them, but you have sold the shares and that sale has 'settled' and you have the money in your brokerage account.

econner 10y ago
> They had a pretty large participating contribution (50M shares as I recall) so that is a bunch of money that paid off some folks who might have been skittish. Could you explain what this means a little more? What is a participating contribution in this context? Are these shares employees were able to sell in the IPO?
- ChuckMcM 10y ago
  The s1 listed 50m shares as coming from existing share holders but they did not break it out. Usually that is employees with vested shares and occasionally other investors. Was more common in the dot com IPO's but Zynga did that too as I recall
  - econner 10y ago
    Ah ok, so the company makes an exception to the lockup period for IPO participation? How do they typically decide who gets to participate?
    - ChuckMcM 10y ago
      Its a negotiation that happens with the bank that is taking the company public. They are trading off the 'optics' of a bunch of people selling their stake at the IPO vs value. The lockup period for executive (officers) and non-officers is also negotiated. The bankers want to strike a balance between employees (especially officers) who have concerns about being whipsawed with the stock price and the perception that they feel the company will grow in value over time so holding the stock is a "good" investment.

username223 10y ago

> 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. Not to mention their $500 million net loss last year. There are cheaper cash incinerators. > 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. There's no doubt in my mind -- they'll pull some social flim-flam for as long as they can. The whole thing is just nuts. No one's going to buy them now, and their pivot to becoming a "camera company" has yielded an even uglier version of Google Glass. Man, this surveillance economy bubble feels so close to bursting...