17 ms·

Snap Tumbles Below IPO Opening Price as Analysts Say Sell

348 points by chollida1 10y ago

sfilargi 10y ago
Isn't this what happened with FB as well?
- bowmessage 10y ago
  yes, and now it's worth over 3x its opening day price.
  - sfilargi 10y ago
    Exactly, so I wouldn't hold my breath over this. It will fluctuate for a bit.
  - seppin 10y ago
    b/c they were growing and figured out their mobile strategy. Snap has both yet to solve
    - k-mcgrady 10y ago
      >> Snap has both yet to solve Huh? Snap is mobile only. Facebook was way behind in mobile, particularly in advertising (I don't think they even did mobile ads at that point). On the growth point, unless they do something really cool, I think they're screwed. Instagram has them covered and Snapchat growth slowed significantly since Insta Stories launched.
- chimeracoder 10y ago
  There are a lot of differences between FB and SNAP. The biggest two: 1) FB dropped on opening day itself, which was actually great for Facebook (the company), but not so great for the Morgan Stanley bankers who were underwriting the IPO. They overestimated the price that retail investors would want to pay, so they overpaid Facebook for the shares. 2) SNAP is issuing only Class A shares, which are non-voting. Some other companies have segregated classes of shares with different voting rights, but according to SNAP's own S-1, they are the first company to have an IPO with only non-voting shares available. Combine that with the fact that they have no plans to make a profit[0] or to issue any dividends[0][2], and that means that the appeal to investors is very limited: they have no way to influence company decisions, and no way to participate in profits from the company. Those are usually the two biggest contributors to the fundamental value of a stock. [0] this is not my opinion; this is a direct quotation from their S-1: "We have incurred operating losses in the past, expect to incur operating losses in the future, and may never achieve or maintain profitability." [1] Again, directly from their S-1: "We do not intend to pay cash dividends for the foreseeable future." [1] https://www.sec.gov/Archives/edgar/data/1564408/000119312517029199/d270216ds1.htm https://www.sec.gov/Archives/edgar/data/1564408/000119312517...
  - seanalltogether 10y ago
    > Some other companies have segregated classes of shares with different voting rights, but according to SNAP's own S-1, they are the first company to have an IPO with only non-voting shares available. To me this shows the cynicism inherent in the entire stock market system. We're all just trading on the popularity and good will of these companies, and they know it.
    - sumedh 10y ago
      Investors have the option to read about all the these low level details and can chose not to invest but in reality that does not happen.
  - Retric 10y ago
    [0] does not mean "no plans to make a profit" it just means what it actually says. Other than that getting IPO price correct is very complex for companies without a history of profits. However, any price greater than zero is still useful.
    - chimeracoder 10y ago
      > [0] does not mean "no plans to make a profit" it just means what it actually says They do not have plans to make a profit. They have plans to do things, and those things may, in the future, generate a profit, but they have not committed to any concrete timeline for generating a profit or set any estimated targets for profitability, which I think can be reasonably summarized in a colloquial context by "no plans to make a profit".
  - marcell 10y ago
    > [0] this is not my opinion; this is a direct quotation from their S-1: "We have incurred operating losses in the past, expect to incur operating losses in the future, and may never achieve or maintain profitability." > [1] Again, directly from their S-1: "We do not intend to pay cash dividends for the foreseeable future." FWIW this is a negative spin on the statements. The first [0] statement sounds like a standard warning, and the second [1] specifically calls out cash dividends, not profits. FB has not paid any cash dividends, neither has Google, but both have large profits. It's uncommon for tech companies to pay cash dividends. Apple and Microsoft do it (both very old companies), but few others do.
- peterjlee 10y ago
  Facebook had $1B in profit in 2011(1), the IPO was mid 2012. Maybe it wasn't enough to justify the $100B+ valuation at IPO but at least they had their business figured out; which is not the case for Snap, yet.. (1): https://techcrunch.com/2012/02/01/facebook-1-billion-profit/ https://techcrunch.com/2012/02/01/facebook-1-billion-profit/
  - macspoofing 10y ago
    What's there to figure out? Serve ads. That's the business.
    - peterjlee 10y ago
      It's a tricky business. ask twitter
fratlas 10y ago
Eh, just volatile atm. Interesting to see if it tanks big time.
- deleted 10y ago
  [deleted]
chollida1 10y ago
I thought this was relevant more so because of all the analysts covering SNAP, not a single one has a but rating on it. That's pretty unusual for a 10+ billion dollar company
- GCA10 10y ago
  SEC rules say that underwriters (i.e. most of Wall Street) aren't allowed to hype their own handicraft until a suitable number of days have passed. The length of this "quiet period" keeps changing, but according to this article, it's now 10 days on the books, with most underwriter/analyst firms choosing to play it safe and observe 25 days of restraint. https://ipocandy.com/quiet-periods/ https://ipocandy.com/quiet-periods/
  - wapz 10y ago
    What is a underwriters/handicraft? Are they writers paid by the company to write bearish articles about them and have 'no' affiliation so there's no disclaimer?
    - greenyoda 10y ago
      In an IPO, the underwriters are the investment banks who handle the initial distribution of the stock. From Wikipedia: "Securities underwriting refers to the process by which investment banks raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt capital). The services of an underwriter are typically used during a public offering in a primary market. This is a way of distributing a newly issued security, such as stocks or bonds, to investors. A syndicate of banks (the lead managers) underwrites the transaction, which means they have taken on the risk of distributing the securities. Should they not be able to find enough investors, they will have to hold some securities themselves. Underwriters make their income from the price difference (the "underwriting spread") between the price they pay the issuer and what they collect from investors or from broker-dealers who buy portions of the offering."[1] When the comment above said "underwriters aren't allowed to hype their own handicraft", the "handicraft" he's referring to is the new stock that they just distributed, and hyping it generally takes the form of the banks' analysts issuing "buy" recommendations. [1] https://en.wikipedia.org/wiki/Underwriting#Securities_underwriting https://en.wikipedia.org/wiki/Underwriting#Securities_underw...
wernerb 10y ago
I can't argue with the logic of the talk show guest, (who seems very good at her job!) They are dealing with economy of scale. If facebook+google have 90% ad penetration then snap must displace facebook.
- gwern 10y ago
  So might function as a useful hedge on FB and Google stock.
  - rqebmm 10y ago
    I hadn't thought of that, but it would explain the runaway valuation more than any other theory I've heard.
- ucaetano 10y ago
  Displacing might not be the actual word. You could, for example, say that the digital ad market will double in 5 years, and Snapchat will capture all of that additional revenue, becoming bigger than FB and Google combined. It wouldn't be displacing them per se, they'd still sell the same $ to the same companies. Will that happen? My guess would be on no. I don't think there's room for a 3rd large player in the digital ads world, Twitter tried to be it, but failed. But hey, maybe Snap is able to do it (but I doubt it).
  - crazypyro 10y ago
    It displaces them in the relevant metric (ad penetration), so I think it still fits fine in this context. It would be different if the original commentator was arguing that Snap is going to displace FB/Google's current revenue.
ucha 10y ago
It's below the opening price which is not a big deal. FB on the other hand quickly dipped below the offering price. If the 3 days expected value of a recent IPO is significantly different from the opening price, that would create an easy arbitrage opportunity.
- lisper 10y ago
  > It's below the opening price which is not a big deal. It is if you bought at the opening. Retail investors don't get to participate at the offering price.
  - tim333 10y ago
    Stocks go up and down. If you're shocked that a stock you bought at 25 is now trading at 24 you probably shouldn't be trading.
  - Lazare 10y ago
    Retail investors shouldn't be gambling on IPOs.
  - elastic_church 10y ago
    yeah but it isn't as headline worthy. There is a syndicate of investment banks legally propping up the price at $17 for a short time. If selling pressure somehow breaches the syndicate bid, HOUSTON WE HAVE A PROBLEM.
    - lisper 10y ago
      Yeah, that was kind of my point. Whether or not it's a big deal depends on who you are.
wufufufu 10y ago
Maybe the strategy is to start at obscenely overpriced so when you "tank" and descend into just very overpriced, the market thinks you might soon return to previous heights and you settle around there.
- fullshark 10y ago
  The strategy was to get 3+ Billion dollars. It succeeded beautifully, and since shares have no voting rights they don't have to worry about pressure from Wall Street. They will have to worry about talent acquisition/retention if the stock price tanks though. But maybe that is offset in the short term by the appeal of working for a company with public shares.
ganfortran 10y ago
So is Snap going to be the next Facebook, or ... Twitter?
- josu 10y ago
  pets.com
fiatjaf 10y ago
What is "Snap"?
- dave5104 10y ago
  Snap, Inc., the company that produces Snapchat and Spectacles.
- justinsaccount 10y ago
  Snapchat inc.
  - deleted 10y ago
    [deleted]
- caoyangs 10y ago
  SNAP is their stock symbol.
- kgwgk 10y ago
  Snap Inc. is the company formerly known as Snapchat Inc.
JumpCrisscross 10y ago
Before Snap's IPO, I declined when asked to make predictions. But I did say what I thought would be the best for venture-backed companies in the long run. It is a small pop on IPO day followed by a months-long drag down to a reasonable valuation. The small pop would signal healthy IPO conditions. The slow run down would show investors aren't in full-throttle bubble mode. We got the pop, plus some, as well as the the drag down, albeit sooner and faster than expected. If SNAP continues to between here and the offering price we can still chalk this up as a win for SV. (Keep in mind, Facebook--whose revenues grew 54.2% from FYE 2015 to FYE 2016--trades at 14.4x FYE 2016 revenues. That implies a $5.82bn valuation for Snap. It's trading at a $30.4bn valuation, or 5x higher.) [1] https://www.google.com/finance?q=NASDAQ%3AFB&fstype=ii&ei=4-i9WIGIJ8fDjAGq1p_YCw https://www.google.com/finance?q=NASDAQ%3AFB&fstype=ii&ei=4-... Disclaimer: this is not investment advice. Please don't be a numpty and buy or sell securities based on Internet comments.
- jacquesm 10y ago
  > we can still chalk this up as a win for SV. But a loss for the investors that bought the stock on the open market. So even if you think that's a good thing it will definitely reduce the chance of seeing another pop with the next IPO. A 'drag down' is never a good thing for a stock.
  - crazypyro 10y ago
    Isn't the original commentator arguing that its good for the ecosystem as a whole, not necessarily good for SNAP?
    - jacquesm 10y ago
      And I'm arguing that it is not good for the ecosystem as a whole.
  - JumpCrisscross 10y ago
    > it will definitely reduce the chance of seeing another pop with the next IPO "Pop" is a function of the gap between what the underwriters pay the company (the offering price), what the underwriters offer the market (the opening price) and what the market offers itself (the first-day closing price). Lower first-day closing expectations thus mean less "pop", less profit for the bankers and/or a lower offering price for the company. If you believe, as I do, that valuations are touching on frothy, none of those is a bad thing. Keep in mind that Snap was happy to go public at 14 to 16 a share [1]. Bankers priced at 17, it opened at 24 and then we got this mess. > A 'drag down' is never a good thing for a stock It can be healthy for the market if it encourages sustainable practices. That's my point--it's good in the long run. [1] http://www.usatoday.com/story/tech/news/2017/02/16/snap-prices-ipo-between-14-and-16-share/97990394/ http://www.usatoday.com/story/tech/news/2017/02/16/snap-pric...
anonu 10y ago
It may not be too clear from the headline - but analysts were saying sell before the IPO as well.
soheil 10y ago
It is amazing how a few analysts can change how much a company is valued on the stock market. Has the opinion about Snapchat on tech forums like this, whose opinion should matter since we're literally the people who built it have significantly changed since two days ago to justify a 4 billion dollars price change?
- DougN7 10y ago
  There are many of us techies who think it's rediculously over priced. It's cool with teens because their parents aren't there. Teens are fickle and will move on, especially if parents show up (or those teens stay around long enough to become the parents). I give it 10 years.
  - soheil 10y ago
    Unless they morph into something different or maybe try to be everything for everyone which seems to be the strategy nowadays, e.g. FB, Amazon, at least Amazon completely dominated the book sector before morphing.
    - beager 10y ago
      To me this was apparent in their corporate rebrand as Snap Inc. Threading the needle and parlaying your hype into a diversified, profitable holdings corp is the formula they seem to be following. IMO Amazon got there naturally, FB took big, deliberate steps to get there, and Twitter is not getting there fast enough. I'm bearish on Snap at current numbers, but willing to see how they play their position for long term growth. (I have no positions, this is not investment advice, reality is a construct of the human mind etc)
    - deleted 10y ago
      [deleted]
  - foota 10y ago
    I disagree, I think snapchat will be less vulnerable to the "parents are there" effect because it's more about messaging than it is profiles.
jondubois 10y ago
Their finances look horrible; worse than Twitter. Unlike Twitter, however, they make almost 0 Gross Profit (not even counting admin expenses and R&D). It looks like they're counting entirely on growth but the revenue numbers still look very small. Twitter's revenue is $2 billion+, Facebook is $27 billion+. Snap's $400 million looks measly by comparison especially when you consider the expenses incurred.
- iaw 10y ago
  Their growth figures look really bad relative to Facebook at the same stage.
  - adventured 10y ago
    It should, they're not the next Facebook. No social network is going to be. Facebook managed their growth rates, in a mostly open field, while not having to compete with another social network quasi-monopoly with 1.2 billion daily actives.
  - 2_listerine_pls 10y ago
    Who even compares Facebook with Snap? gooby pls
- dxbydt 10y ago
  > Twitter's revenue is $2 billion+, Facebook is $27 billion+. Snap's $400 million looks measly Apples to apples etc... TWTR revenue 665M in 2013 (the year they went public) TWTR revenue 316M in 2012 (the year before) FB rev 5.09B in 2012 (the year it went public) FB rev 3.7B in 2011 (the year before) SNAP rev ??? in 2017 (the year it went public) SNAP rev 400M in 2016 (the year before)
tommynicholas 10y ago
Yes it opened around this price, but the IPO price was $17. Another non-story about a stock dropping in price after it grew like crazy just before the drop.
swingbridge 10y ago
The company's financial fundamentals are terrible. The only thing holding the value up is fluff and hot air. If people get less excited by that the price goes way down and that's what happened today. If people really really lose excitement the price will fall like a rock since there's no typical financial fundamental circuit breakers (like P/E ratio) to stop the thing from just going down down down.
nodesocket 10y ago
While I don't believe that $SNAP financials are solid (I am bearish), I do applaud them and Mulesoft for going public. Too often today large (well past series C) tech companies (I won't name any names) refuse to go public and instead continue to take private equity and foreign investment and prop themselves up on absurd valuations with no-checks and balances. Some of these companies are absolute dog shit, yet they continue to receive unlimited funding and insane valuations in a vacuum with no market to short them. Wall Street calls bullshit when they see it, and smart people short bad companies when they find them. Silicon Valley doesn't provide a way to short these propped-up companies, they just continue to self-promote themselves on private equity and foreign investment.
- jedberg 10y ago
  I saw this and thought I was going crazy. I could have sworn I just read it. And I was right! https://news.ycombinator.com/item?id=13672675 https://news.ycombinator.com/item?id=13672675 You made the same comment on the Mulesoft IPO announcement. :)
  - nodesocket 10y ago
    Hah, caught me copying from myself a bit ;-). Still my comment applies.
    - jedberg 10y ago
      Yeah, it's totally relevant to this discussion. It just threw me off. I happend to be looking at that 17 day old thread earlier to see what people said about the Mulesoft IPO to see if it was worth participating in.
    - cwilkes 10y ago
      Also regarding twitter :) https://news.ycombinator.com/item?id=13620748 https://news.ycombinator.com/item?id=13620748 Wall Street calls bullshit when they see it, and smart people short these types of companies. Silicon Valley doesn't provide a way to short these propped-up companies, they just continue to self-promote themselves on private equity and foreign investment.
karllager 10y ago
I hope I am not down-voted. I want to grab the opportunity to sum up my impressions on snap, so I can come back a year later and read up, how stupid they have been. Snap is neither twitter nor fb, which of course is a source of uncertainty. It's not twitter, because snap's data consists of a lot of internet dark matter - so to speak - pixels, that is. Let hell break loose and buy up machine learning engineers and researchers in bulk and let them poke around in it. There sure will be some way to optimize ads, and then just sell it off: the perfect blended ad to the right audience at the right time and space. Is there anything more substantial beside fun? Yes, a nice social pressure signal, millions of tiny celebrity effects playing out every day, together with all the drama, gossip and emotion - which should have a positive effect on ads. The score-rich - I mean the poor teen talent - gets a discount on a product, that has been seen on other influencers (but not too many). The poor pool of losers and in-betweens might buy a burger to get over the pain. This social game is so much fun, it's even fun to just write about it. All this drama, all this pain, captured on tape and stored on a shelve. Ready for a smart machine to look at it and ask: I saw your face before, and the look of yours on someone else, you look sad, you're mostly inside, I have the perfect product to cheer you up, may I? And, oh, I make it fun for you to acquire it, too. You think this is scary? You think it's borderline exploitation, because the data generators can be kept sad, if their score is too low? Which brings me to my conclusion for the record. Snap will thrive part because people just do not care about these things anymore and part because the majority has not much choice. Stronger and more resistant individuals will just reject the instant gratification and focus softening. People, who kind of see through the hype and the value propositions, that maybe matter too you and maybe matter, because somebody would like to make it matter for more people, so I have to adjust. Maybe 80% of a population, according to some estimates, does things, because everybody does them - no or few questions asked. And hey, if all it takes to be accepted is a push of a button, what's the problem? And so the story continues. Snap will thrive. One thing that would kill both facebook and twitter (and snap) would be Moore's law, in the sense, that a social network of friends can be held completely on the interactors devices, because, well in few years, 128GB per phone is ok, text and messages are cheap and can be routed without being stored and scanned and images can be stored and cached locally. But there is no money in letting people alone. No money, if I cannot distract them. No money if I cannot read what they read and see what they see. No money, if I cannot control them and their experience.
josh_carterPDX 10y ago
I have always found it fascinating the role analysts play to impact the price of a stock. Today was the perfect storm of shitty news/advice that drove the price down. Before this morning the stock was up in after-hours trading.
rmoriz 10y ago
Most comments focus on $SNAP itself, but as JumpCrisscross noted: It's also a bad sign for SV IPOs in general. With the upcoming FED hikes and the recent stock market rally, one could say that it will be a lot harder for late stage companies to aquire further financial resources in VC/the private equity market. After the $SNAP hype and crash the public market will probably not be willing to invest in other tech companies in the next months anymore, at least not at the current valuation level.
- prostoalex 10y ago
  This market seems to over-reward profits (FB, NFLX, NVDA) and over-punish losses (TWTR, SNAP).
  - beagle3 10y ago
    "over-"punish losses? Twitter hasn't made a profit once in its years of existence, and does not appear to have a way to make any. Snap said they might never profit in the prospectus. How would you value these companies to reach the conclusion that losses are "over punished"?
  - rmoriz 10y ago
    The market is always right. I just don't believe anyone is willing to take such big risks of failure anymore with so little chance of winning. SNAP was priced so expensive and just to justify the 17$ it would need to make money for years or grow exponentially. Which both didn't happen in the last couple of years, growth is even declining.
    - prostoalex 10y ago
      The subset of the market called "equities traded publicly on U.S. exchanges" is right within its own local maxima of pricing such securities, but it's still subject to inflows and outflows, which depend on macroeconomic picture, interest rates and attractiveness of other subsets. Specific securities, sectors or the stock market in general still can be overbought and oversold.
billions 10y ago
Would it be possible for Facebook to execute a hostile takeover of Snap, now that Snap is public?
- fullshark 10y ago
  No, the shares have no voting power. They are Snapchat fun bucks basically.
vit05 10y ago
SNAP inc priced the public offering at $17 a share.
dorianm 10y ago
It's barely below IPO price http://m.imgur.com/X58hugr http://m.imgur.com/X58hugr
panabee 10y ago
It is difficult to comment on whether Snap is overvalued without analyzing its potential worth. Instead, here are a few observations about Snap's business: * It seems unlikely Snap could plummet in popularity over a few months like some mobile game or Taylor Swift song. If Snap flames out, the usage graph will probably decay more like Skype than Draw Something. The two prongs of its platform allow Snap to (1) enable communication like Skype and (2) distribute content like YouTube. Distribution and communication companies tend to decline much slower than content creators like Zynga. * Snap's entertainment platform could finally crack interactive TV/video. This will be fascinating to watch unfold as Snap empowers content creators to create digestible, interactive video for the coveted advertising demographic of users aged 15-34. In particular, could adding a buy button marry video and commerce in a novel and lucrative way? * Through videos and pictures, Snap can infer a lot about users: style, hobbies, habits, food preferences, and more. This is also a hidden treasure trove for Instagram and Facebook, but given the high frequency of Snap messaging, the data could be richer and more authentic with Snap.
- ribosometronome 10y ago
  Given the nature of Snapchat, one would hope that mining pictures for data, as suggested in your third point, would turn away many users.
  - panabee 10y ago
    It's unclear if they will mine pictures; the third point was merely speculation on what could present a valuable component of the business. That said, mining could be done in a non-creepy way similar to how Facebook mines data without alienating (too many) users.
- intrasight 10y ago
  Do you really think the teen to young adult demographic, who used Snapchat as a nude selfie channel, are going to be interested in Snap as a commercial media with ads channel?
  - 10y ago
AndrewKemendo 10y ago
People keep saying that their financials are terrible, but last I checked they were killing on Revenue [1] compared to the average IPO [2]. Especially if you consider that average revenues at IPO have been steadily dropping since 2012. Average IPO revenue 2015: $38M SNAP revenue 2015: $58M SNAP revenue 2016: $350M Add to the fact that in 2015 on 30% of IPO companies were profitable, they seem to be well within market bounds. [1] http://www.businessinsider.com/data-shows-nearly-half-of-snapchats-revenue-comes-from-discover-ads-2017-1 http://www.businessinsider.com/data-shows-nearly-half-of-sna... [2] https://www.wilmerhale.com/uploadedFiles/Shared_Content https://www.wilmerhale.com/uploadedFiles/Shared_Content
- paulcole 10y ago
  Comparing revenues without corresponding expenses seems a little suspicious.
- soVeryTired 10y ago
  Call me old fashioned, but I think it makes sense to value a company based on profit rather than revenue.
- dragonwriter 10y ago
  > People keep saying that their financials are terrible, but last I checked they were killing on Revenue How is having more revenue without profitability a positive sign?
PhilWright 10y ago
I love the way all reporting of stocks has to show the stock either 'surging', 'soaring' or 'tumbling', 'crashing'. An IPO priced at $24.00 that sells three days later at $23.77 has not tumbled. Sure, it was relatively volatile in the first few days but that is common on high profile IPO's until the price settles to a market determined level. EDIT: No doubt if it rises to $25.00 tomorrow it will have 'rebounded' and be worth another hyped headline.
- drawkbox 10y ago
  Not to mention the wider market is actually in a 'tumble' for the last few days, probably in anticipation of the fed rate increase.
- slededit 10y ago
  If a 12% single day drop doesn't count as a tumble then what would in your definition?
  - option_greek 10y ago
    Not to mention list price usually acts as a good floor (unless the IPO was overpriced to begin with).
  - encoderer 10y ago
    You have to take it in context of relative volatility. There are products where a 12% move wouldn't be notable. In this case, it's under a week old. This expected volatility is why market makers do not sell options on ipo issues for a little while. These kinds of stories are like basing a climate change story on unseasonably warm weather.
    - beejiu 10y ago
      In other words, people are using the market to determine the valuation rather than using the valuation to determine the market.
      - 10y ago
verelo 10y ago
Can we agree that trading at 93 times revenue should be the real headline here? While I find it insane, and others will disagree, it's the real talking point which ever side you sit on!
Grue3 10y ago
Greater fool theory in action. Hope the people who bought it at IPO sold it fast enough.
deleted 10y ago
[deleted]
kfkhalili 10y ago
"Disappearing photos" is a silly concept. Why would anyone buy shares in that?
daliwali 10y ago
This IPO is yet another indicator of a civilization in decline. Snapchat watches people in their most private, most intimate moments, who are unaware that all of their data passes through centralized servers. Why should states even bother with intrusive surveillance anymore, when people freely offer to surveil themselves? If Snapchat disappeared tomorrow, people would just upload their nude photos elsewhere. Nothing of value would be lost, except for maybe the world's largest, most centralized pornography database, with fairly reliable correlation to real identities. That could never lead to abuse of power.
- nailer 10y ago
  > Snapchat watches people in their most private, most intimate moments, who are unaware that all of their data passes through centralized servers. I think most people who use Snapchat are still aware that Snapchat can see their nudes.
  - daliwali 10y ago
    The average Snapchat user isn't going to think about the process of uploading a picture to a central server which is then relayed to the intended recipients and then deleted on the proprietary client-side application (which can be worked around, the problem is that third-party may retain data indefinitely). The average consumer is not that technically literate, consider the people who think Facebook = Internet.
  - xenotb 10y ago
    You might be surrounded by well above-average technical literacy people. I woud guess that even of the people that are aware of how centralized messaging servers work, most don't think about it for months at a time.
wayn3 10y ago
Here's one thing people somehow don't understand. An IPO is a mechanism for a company (and its investors and other stakeholders) to sell shares in exchange for money. The investment bank that facilitates the IPO has the job of "marketing" those shares (and doing the administrative stuff around the IPO). The goal in selling something is to get the best possible price. Therefore, a stock price that goes up at the date of the IPO and then declines below the initial price is the GOAL. It means the bank has done its job well. It got the maximum amount of money out of buyers. If the price stood level, it would mean the bank had left money on the table. If the price went up immediately and then STOOD THERE, it would mean the bank severely underpriced the IPO. Thats the worst case scenario. If the price dips immediately and nobody buys, it just means the IPO was overpriced. This also means that buying at IPO means that you're getting screwed unless you want to hold longterm. You're always paying a premium, unless you believe that the investment bank made a mistake. And you obviously have more data to make that bet than goldman sachs does. Obviously. As a smalltime investor, for whom there is essentially unlimited liquidity in the market, just don't buy IPOs. And don't get excited over IPOs dipping below opening price. It just means you don't understand the mechanism.
- bko 10y ago
  Just note that the stock price is down below first day close. The original owners sold at open price which was 17. The price is now ~24, so its up nearly 40% since initial open.
  - gettingreadyhn 10y ago
    some of the original owners might be "locked" and unable to sell for some time. if you say original investors - then that should be reported and available for public to see soon.
  - wayn3 10y ago
    i believe that anyone who held significant stock prior to IPO is locked out of at least selling for a couple months - SEC probably has some regulations regarding that kind of thing.
- 10y ago
holri 10y ago
'Weighting the evidence objectively, the intelligent investor should conclude that IPO does not stand only for "initial public offering". More accurately, it is also shorthand for: It's Probably Overpriced, Imaginary Profits Only, Insiders' Private Opportunity, or Idiotic, Preposterous and Outrageous.', Benjamin Graham
remyp 10y ago
The borrow rate my broker (IB) is quoting is 120% despite only 7.55% of the float being short. I guess the clearing firms just don't have any shares to lend out -- we could see another price drop once the stock is easier to borrow.
huffmsa 10y ago
ooo wowww, who _ever_ would have seen this coming?

348 points by chollida1 10y ago

sfilargi 10y ago

Isn't this what happened with FB as well?

bowmessage 10y ago
yes, and now it's worth over 3x its opening day price.
- sfilargi 10y ago
  Exactly, so I wouldn't hold my breath over this. It will fluctuate for a bit.
- seppin 10y ago
  b/c they were growing and figured out their mobile strategy. Snap has both yet to solve
  - k-mcgrady 10y ago
    >> Snap has both yet to solve Huh? Snap is mobile only. Facebook was way behind in mobile, particularly in advertising (I don't think they even did mobile ads at that point). On the growth point, unless they do something really cool, I think they're screwed. Instagram has them covered and Snapchat growth slowed significantly since Insta Stories launched.
chimeracoder 10y ago
There are a lot of differences between FB and SNAP. The biggest two: 1) FB dropped on opening day itself, which was actually great for Facebook (the company), but not so great for the Morgan Stanley bankers who were underwriting the IPO. They overestimated the price that retail investors would want to pay, so they overpaid Facebook for the shares. 2) SNAP is issuing only Class A shares, which are non-voting. Some other companies have segregated classes of shares with different voting rights, but according to SNAP's own S-1, they are the first company to have an IPO with only non-voting shares available. Combine that with the fact that they have no plans to make a profit[0] or to issue any dividends[0][2], and that means that the appeal to investors is very limited: they have no way to influence company decisions, and no way to participate in profits from the company. Those are usually the two biggest contributors to the fundamental value of a stock. [0] this is not my opinion; this is a direct quotation from their S-1: "We have incurred operating losses in the past, expect to incur operating losses in the future, and may never achieve or maintain profitability." [1] Again, directly from their S-1: "We do not intend to pay cash dividends for the foreseeable future." [1] https://www.sec.gov/Archives/edgar/data/1564408/000119312517029199/d270216ds1.htm https://www.sec.gov/Archives/edgar/data/1564408/000119312517...
- seanalltogether 10y ago
  > Some other companies have segregated classes of shares with different voting rights, but according to SNAP's own S-1, they are the first company to have an IPO with only non-voting shares available. To me this shows the cynicism inherent in the entire stock market system. We're all just trading on the popularity and good will of these companies, and they know it.
  - sumedh 10y ago
    Investors have the option to read about all the these low level details and can chose not to invest but in reality that does not happen.
- Retric 10y ago
  [0] does not mean "no plans to make a profit" it just means what it actually says. Other than that getting IPO price correct is very complex for companies without a history of profits. However, any price greater than zero is still useful.
  - chimeracoder 10y ago
    > [0] does not mean "no plans to make a profit" it just means what it actually says They do not have plans to make a profit. They have plans to do things, and those things may, in the future, generate a profit, but they have not committed to any concrete timeline for generating a profit or set any estimated targets for profitability, which I think can be reasonably summarized in a colloquial context by "no plans to make a profit".
- marcell 10y ago
  > [0] this is not my opinion; this is a direct quotation from their S-1: "We have incurred operating losses in the past, expect to incur operating losses in the future, and may never achieve or maintain profitability." > [1] Again, directly from their S-1: "We do not intend to pay cash dividends for the foreseeable future." FWIW this is a negative spin on the statements. The first [0] statement sounds like a standard warning, and the second [1] specifically calls out cash dividends, not profits. FB has not paid any cash dividends, neither has Google, but both have large profits. It's uncommon for tech companies to pay cash dividends. Apple and Microsoft do it (both very old companies), but few others do.
peterjlee 10y ago
Facebook had $1B in profit in 2011(1), the IPO was mid 2012. Maybe it wasn't enough to justify the $100B+ valuation at IPO but at least they had their business figured out; which is not the case for Snap, yet.. (1): https://techcrunch.com/2012/02/01/facebook-1-billion-profit/ https://techcrunch.com/2012/02/01/facebook-1-billion-profit/
- macspoofing 10y ago
  What's there to figure out? Serve ads. That's the business.
  - peterjlee 10y ago
    It's a tricky business. ask twitter

fratlas 10y ago

Eh, just volatile atm. Interesting to see if it tanks big time.

deleted 10y ago
[deleted]

chollida1 10y ago

I thought this was relevant more so because of all the analysts covering SNAP, not a single one has a but rating on it. That's pretty unusual for a 10+ billion dollar company

GCA10 10y ago
SEC rules say that underwriters (i.e. most of Wall Street) aren't allowed to hype their own handicraft until a suitable number of days have passed. The length of this "quiet period" keeps changing, but according to this article, it's now 10 days on the books, with most underwriter/analyst firms choosing to play it safe and observe 25 days of restraint. https://ipocandy.com/quiet-periods/ https://ipocandy.com/quiet-periods/
- wapz 10y ago
  What is a underwriters/handicraft? Are they writers paid by the company to write bearish articles about them and have 'no' affiliation so there's no disclaimer?
  - greenyoda 10y ago
    In an IPO, the underwriters are the investment banks who handle the initial distribution of the stock. From Wikipedia: "Securities underwriting refers to the process by which investment banks raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt capital). The services of an underwriter are typically used during a public offering in a primary market. This is a way of distributing a newly issued security, such as stocks or bonds, to investors. A syndicate of banks (the lead managers) underwrites the transaction, which means they have taken on the risk of distributing the securities. Should they not be able to find enough investors, they will have to hold some securities themselves. Underwriters make their income from the price difference (the "underwriting spread") between the price they pay the issuer and what they collect from investors or from broker-dealers who buy portions of the offering."[1] When the comment above said "underwriters aren't allowed to hype their own handicraft", the "handicraft" he's referring to is the new stock that they just distributed, and hyping it generally takes the form of the banks' analysts issuing "buy" recommendations. [1] https://en.wikipedia.org/wiki/Underwriting#Securities_underwriting https://en.wikipedia.org/wiki/Underwriting#Securities_underw...

wernerb 10y ago

I can't argue with the logic of the talk show guest, (who seems very good at her job!) They are dealing with economy of scale. If facebook+google have 90% ad penetration then snap must displace facebook.

gwern 10y ago
So might function as a useful hedge on FB and Google stock.
- rqebmm 10y ago
  I hadn't thought of that, but it would explain the runaway valuation more than any other theory I've heard.
ucaetano 10y ago
Displacing might not be the actual word. You could, for example, say that the digital ad market will double in 5 years, and Snapchat will capture all of that additional revenue, becoming bigger than FB and Google combined. It wouldn't be displacing them per se, they'd still sell the same $ to the same companies. Will that happen? My guess would be on no. I don't think there's room for a 3rd large player in the digital ads world, Twitter tried to be it, but failed. But hey, maybe Snap is able to do it (but I doubt it).
- crazypyro 10y ago
  It displaces them in the relevant metric (ad penetration), so I think it still fits fine in this context. It would be different if the original commentator was arguing that Snap is going to displace FB/Google's current revenue.

ucha 10y ago

It's below the opening price which is not a big deal. FB on the other hand quickly dipped below the offering price. If the 3 days expected value of a recent IPO is significantly different from the opening price, that would create an easy arbitrage opportunity.

lisper 10y ago
> It's below the opening price which is not a big deal. It is if you bought at the opening. Retail investors don't get to participate at the offering price.
- tim333 10y ago
  Stocks go up and down. If you're shocked that a stock you bought at 25 is now trading at 24 you probably shouldn't be trading.
- Lazare 10y ago
  Retail investors shouldn't be gambling on IPOs.
- elastic_church 10y ago
  yeah but it isn't as headline worthy. There is a syndicate of investment banks legally propping up the price at $17 for a short time. If selling pressure somehow breaches the syndicate bid, HOUSTON WE HAVE A PROBLEM.
  - lisper 10y ago
    Yeah, that was kind of my point. Whether or not it's a big deal depends on who you are.

wufufufu 10y ago

Maybe the strategy is to start at obscenely overpriced so when you "tank" and descend into just very overpriced, the market thinks you might soon return to previous heights and you settle around there.

fullshark 10y ago
The strategy was to get 3+ Billion dollars. It succeeded beautifully, and since shares have no voting rights they don't have to worry about pressure from Wall Street. They will have to worry about talent acquisition/retention if the stock price tanks though. But maybe that is offset in the short term by the appeal of working for a company with public shares.

ganfortran 10y ago

So is Snap going to be the next Facebook, or ... Twitter?

josu 10y ago
pets.com

fiatjaf 10y ago

What is "Snap"?

dave5104 10y ago
Snap, Inc., the company that produces Snapchat and Spectacles.
justinsaccount 10y ago
Snapchat inc.
- deleted 10y ago
  [deleted]
caoyangs 10y ago
SNAP is their stock symbol.
kgwgk 10y ago
Snap Inc. is the company formerly known as Snapchat Inc.

JumpCrisscross 10y ago

Before Snap's IPO, I declined when asked to make predictions. But I did say what I thought would be the best for venture-backed companies in the long run. It is a small pop on IPO day followed by a months-long drag down to a reasonable valuation. The small pop would signal healthy IPO conditions. The slow run down would show investors aren't in full-throttle bubble mode. We got the pop, plus some, as well as the the drag down, albeit sooner and faster than expected. If SNAP continues to between here and the offering price we can still chalk this up as a win for SV. (Keep in mind, Facebook--whose revenues grew 54.2% from FYE 2015 to FYE 2016--trades at 14.4x FYE 2016 revenues. That implies a $5.82bn valuation for Snap. It's trading at a $30.4bn valuation, or 5x higher.) [1] https://www.google.com/finance?q=NASDAQ%3AFB&fstype=ii&ei=4-i9WIGIJ8fDjAGq1p_YCw https://www.google.com/finance?q=NASDAQ%3AFB&fstype=ii&ei=4-... Disclaimer: this is not investment advice. Please don't be a numpty and buy or sell securities based on Internet comments.

jacquesm 10y ago
> we can still chalk this up as a win for SV. But a loss for the investors that bought the stock on the open market. So even if you think that's a good thing it will definitely reduce the chance of seeing another pop with the next IPO. A 'drag down' is never a good thing for a stock.
- crazypyro 10y ago
  Isn't the original commentator arguing that its good for the ecosystem as a whole, not necessarily good for SNAP?
  - jacquesm 10y ago
    And I'm arguing that it is not good for the ecosystem as a whole.
- JumpCrisscross 10y ago
  > it will definitely reduce the chance of seeing another pop with the next IPO "Pop" is a function of the gap between what the underwriters pay the company (the offering price), what the underwriters offer the market (the opening price) and what the market offers itself (the first-day closing price). Lower first-day closing expectations thus mean less "pop", less profit for the bankers and/or a lower offering price for the company. If you believe, as I do, that valuations are touching on frothy, none of those is a bad thing. Keep in mind that Snap was happy to go public at 14 to 16 a share [1]. Bankers priced at 17, it opened at 24 and then we got this mess. > A 'drag down' is never a good thing for a stock It can be healthy for the market if it encourages sustainable practices. That's my point--it's good in the long run. [1] http://www.usatoday.com/story/tech/news/2017/02/16/snap-prices-ipo-between-14-and-16-share/97990394/ http://www.usatoday.com/story/tech/news/2017/02/16/snap-pric...

anonu 10y ago

It may not be too clear from the headline - but analysts were saying sell before the IPO as well.

soheil 10y ago

It is amazing how a few analysts can change how much a company is valued on the stock market. Has the opinion about Snapchat on tech forums like this, whose opinion should matter since we're literally the people who built it have significantly changed since two days ago to justify a 4 billion dollars price change?

DougN7 10y ago
There are many of us techies who think it's rediculously over priced. It's cool with teens because their parents aren't there. Teens are fickle and will move on, especially if parents show up (or those teens stay around long enough to become the parents). I give it 10 years.
- soheil 10y ago
  Unless they morph into something different or maybe try to be everything for everyone which seems to be the strategy nowadays, e.g. FB, Amazon, at least Amazon completely dominated the book sector before morphing.
  - beager 10y ago
    To me this was apparent in their corporate rebrand as Snap Inc. Threading the needle and parlaying your hype into a diversified, profitable holdings corp is the formula they seem to be following. IMO Amazon got there naturally, FB took big, deliberate steps to get there, and Twitter is not getting there fast enough. I'm bearish on Snap at current numbers, but willing to see how they play their position for long term growth. (I have no positions, this is not investment advice, reality is a construct of the human mind etc)
  - deleted 10y ago
    [deleted]
- foota 10y ago
  I disagree, I think snapchat will be less vulnerable to the "parents are there" effect because it's more about messaging than it is profiles.

jondubois 10y ago

Their finances look horrible; worse than Twitter. Unlike Twitter, however, they make almost 0 Gross Profit (not even counting admin expenses and R&D). It looks like they're counting entirely on growth but the revenue numbers still look very small. Twitter's revenue is $2 billion+, Facebook is $27 billion+. Snap's $400 million looks measly by comparison especially when you consider the expenses incurred.

iaw 10y ago
Their growth figures look really bad relative to Facebook at the same stage.
- adventured 10y ago
  It should, they're not the next Facebook. No social network is going to be. Facebook managed their growth rates, in a mostly open field, while not having to compete with another social network quasi-monopoly with 1.2 billion daily actives.
- 2_listerine_pls 10y ago
  Who even compares Facebook with Snap? gooby pls
dxbydt 10y ago
> Twitter's revenue is $2 billion+, Facebook is $27 billion+. Snap's $400 million looks measly Apples to apples etc... TWTR revenue 665M in 2013 (the year they went public) TWTR revenue 316M in 2012 (the year before) FB rev 5.09B in 2012 (the year it went public) FB rev 3.7B in 2011 (the year before) SNAP rev ??? in 2017 (the year it went public) SNAP rev 400M in 2016 (the year before)

tommynicholas 10y ago

Yes it opened around this price, but the IPO price was $17. Another non-story about a stock dropping in price after it grew like crazy just before the drop.

swingbridge 10y ago

The company's financial fundamentals are terrible. The only thing holding the value up is fluff and hot air. If people get less excited by that the price goes way down and that's what happened today. If people really really lose excitement the price will fall like a rock since there's no typical financial fundamental circuit breakers (like P/E ratio) to stop the thing from just going down down down.

nodesocket 10y ago

While I don't believe that $SNAP financials are solid (I am bearish), I do applaud them and Mulesoft for going public. Too often today large (well past series C) tech companies (I won't name any names) refuse to go public and instead continue to take private equity and foreign investment and prop themselves up on absurd valuations with no-checks and balances. Some of these companies are absolute dog shit, yet they continue to receive unlimited funding and insane valuations in a vacuum with no market to short them. Wall Street calls bullshit when they see it, and smart people short bad companies when they find them. Silicon Valley doesn't provide a way to short these propped-up companies, they just continue to self-promote themselves on private equity and foreign investment.

jedberg 10y ago
I saw this and thought I was going crazy. I could have sworn I just read it. And I was right! https://news.ycombinator.com/item?id=13672675 https://news.ycombinator.com/item?id=13672675 You made the same comment on the Mulesoft IPO announcement. :)
- nodesocket 10y ago
  Hah, caught me copying from myself a bit ;-). Still my comment applies.
  - jedberg 10y ago
    Yeah, it's totally relevant to this discussion. It just threw me off. I happend to be looking at that 17 day old thread earlier to see what people said about the Mulesoft IPO to see if it was worth participating in.
  - cwilkes 10y ago
    Also regarding twitter :) https://news.ycombinator.com/item?id=13620748 https://news.ycombinator.com/item?id=13620748 Wall Street calls bullshit when they see it, and smart people short these types of companies. Silicon Valley doesn't provide a way to short these propped-up companies, they just continue to self-promote themselves on private equity and foreign investment.

karllager 10y ago

I hope I am not down-voted. I want to grab the opportunity to sum up my impressions on snap, so I can come back a year later and read up, how stupid they have been. Snap is neither twitter nor fb, which of course is a source of uncertainty. It's not twitter, because snap's data consists of a lot of internet dark matter - so to speak - pixels, that is. Let hell break loose and buy up machine learning engineers and researchers in bulk and let them poke around in it. There sure will be some way to optimize ads, and then just sell it off: the perfect blended ad to the right audience at the right time and space. Is there anything more substantial beside fun? Yes, a nice social pressure signal, millions of tiny celebrity effects playing out every day, together with all the drama, gossip and emotion - which should have a positive effect on ads. The score-rich - I mean the poor teen talent - gets a discount on a product, that has been seen on other influencers (but not too many). The poor pool of losers and in-betweens might buy a burger to get over the pain. This social game is so much fun, it's even fun to just write about it. All this drama, all this pain, captured on tape and stored on a shelve. Ready for a smart machine to look at it and ask: I saw your face before, and the look of yours on someone else, you look sad, you're mostly inside, I have the perfect product to cheer you up, may I? And, oh, I make it fun for you to acquire it, too. You think this is scary? You think it's borderline exploitation, because the data generators can be kept sad, if their score is too low? Which brings me to my conclusion for the record. Snap will thrive part because people just do not care about these things anymore and part because the majority has not much choice. Stronger and more resistant individuals will just reject the instant gratification and focus softening. People, who kind of see through the hype and the value propositions, that maybe matter too you and maybe matter, because somebody would like to make it matter for more people, so I have to adjust. Maybe 80% of a population, according to some estimates, does things, because everybody does them - no or few questions asked. And hey, if all it takes to be accepted is a push of a button, what's the problem? And so the story continues. Snap will thrive. One thing that would kill both facebook and twitter (and snap) would be Moore's law, in the sense, that a social network of friends can be held completely on the interactors devices, because, well in few years, 128GB per phone is ok, text and messages are cheap and can be routed without being stored and scanned and images can be stored and cached locally. But there is no money in letting people alone. No money, if I cannot distract them. No money if I cannot read what they read and see what they see. No money, if I cannot control them and their experience.

josh_carterPDX 10y ago

I have always found it fascinating the role analysts play to impact the price of a stock. Today was the perfect storm of shitty news/advice that drove the price down. Before this morning the stock was up in after-hours trading.

rmoriz 10y ago

Most comments focus on $SNAP itself, but as JumpCrisscross noted: It's also a bad sign for SV IPOs in general. With the upcoming FED hikes and the recent stock market rally, one could say that it will be a lot harder for late stage companies to aquire further financial resources in VC/the private equity market. After the $SNAP hype and crash the public market will probably not be willing to invest in other tech companies in the next months anymore, at least not at the current valuation level.

prostoalex 10y ago
This market seems to over-reward profits (FB, NFLX, NVDA) and over-punish losses (TWTR, SNAP).
- beagle3 10y ago
  "over-"punish losses? Twitter hasn't made a profit once in its years of existence, and does not appear to have a way to make any. Snap said they might never profit in the prospectus. How would you value these companies to reach the conclusion that losses are "over punished"?
- rmoriz 10y ago
  The market is always right. I just don't believe anyone is willing to take such big risks of failure anymore with so little chance of winning. SNAP was priced so expensive and just to justify the 17$ it would need to make money for years or grow exponentially. Which both didn't happen in the last couple of years, growth is even declining.
  - prostoalex 10y ago
    The subset of the market called "equities traded publicly on U.S. exchanges" is right within its own local maxima of pricing such securities, but it's still subject to inflows and outflows, which depend on macroeconomic picture, interest rates and attractiveness of other subsets. Specific securities, sectors or the stock market in general still can be overbought and oversold.

billions 10y ago

Would it be possible for Facebook to execute a hostile takeover of Snap, now that Snap is public?

fullshark 10y ago
No, the shares have no voting power. They are Snapchat fun bucks basically.

vit05 10y ago

SNAP inc priced the public offering at $17 a share.

dorianm 10y ago

It's barely below IPO price http://m.imgur.com/X58hugr http://m.imgur.com/X58hugr

panabee 10y ago

It is difficult to comment on whether Snap is overvalued without analyzing its potential worth. Instead, here are a few observations about Snap's business: * It seems unlikely Snap could plummet in popularity over a few months like some mobile game or Taylor Swift song. If Snap flames out, the usage graph will probably decay more like Skype than Draw Something. The two prongs of its platform allow Snap to (1) enable communication like Skype and (2) distribute content like YouTube. Distribution and communication companies tend to decline much slower than content creators like Zynga. * Snap's entertainment platform could finally crack interactive TV/video. This will be fascinating to watch unfold as Snap empowers content creators to create digestible, interactive video for the coveted advertising demographic of users aged 15-34. In particular, could adding a buy button marry video and commerce in a novel and lucrative way? * Through videos and pictures, Snap can infer a lot about users: style, hobbies, habits, food preferences, and more. This is also a hidden treasure trove for Instagram and Facebook, but given the high frequency of Snap messaging, the data could be richer and more authentic with Snap.

ribosometronome 10y ago
Given the nature of Snapchat, one would hope that mining pictures for data, as suggested in your third point, would turn away many users.
- panabee 10y ago
  It's unclear if they will mine pictures; the third point was merely speculation on what could present a valuable component of the business. That said, mining could be done in a non-creepy way similar to how Facebook mines data without alienating (too many) users.
intrasight 10y ago
Do you really think the teen to young adult demographic, who used Snapchat as a nude selfie channel, are going to be interested in Snap as a commercial media with ads channel?
- 10y ago

AndrewKemendo 10y ago

People keep saying that their financials are terrible, but last I checked they were killing on Revenue [1] compared to the average IPO [2]. Especially if you consider that average revenues at IPO have been steadily dropping since 2012. Average IPO revenue 2015: $38M SNAP revenue 2015: $58M SNAP revenue 2016: $350M Add to the fact that in 2015 on 30% of IPO companies were profitable, they seem to be well within market bounds. [1] http://www.businessinsider.com/data-shows-nearly-half-of-snapchats-revenue-comes-from-discover-ads-2017-1 http://www.businessinsider.com/data-shows-nearly-half-of-sna... [2] https://www.wilmerhale.com/uploadedFiles/Shared_Content https://www.wilmerhale.com/uploadedFiles/Shared_Content

paulcole 10y ago
Comparing revenues without corresponding expenses seems a little suspicious.
soVeryTired 10y ago
Call me old fashioned, but I think it makes sense to value a company based on profit rather than revenue.
dragonwriter 10y ago
> People keep saying that their financials are terrible, but last I checked they were killing on Revenue How is having more revenue without profitability a positive sign?

PhilWright 10y ago

I love the way all reporting of stocks has to show the stock either 'surging', 'soaring' or 'tumbling', 'crashing'. An IPO priced at $24.00 that sells three days later at $23.77 has not tumbled. Sure, it was relatively volatile in the first few days but that is common on high profile IPO's until the price settles to a market determined level. EDIT: No doubt if it rises to $25.00 tomorrow it will have 'rebounded' and be worth another hyped headline.

drawkbox 10y ago
Not to mention the wider market is actually in a 'tumble' for the last few days, probably in anticipation of the fed rate increase.
slededit 10y ago
If a 12% single day drop doesn't count as a tumble then what would in your definition?
- option_greek 10y ago
  Not to mention list price usually acts as a good floor (unless the IPO was overpriced to begin with).
- encoderer 10y ago
  You have to take it in context of relative volatility. There are products where a 12% move wouldn't be notable. In this case, it's under a week old. This expected volatility is why market makers do not sell options on ipo issues for a little while. These kinds of stories are like basing a climate change story on unseasonably warm weather.
  - beejiu 10y ago
    In other words, people are using the market to determine the valuation rather than using the valuation to determine the market.
    - 10y ago

verelo 10y ago

Can we agree that trading at 93 times revenue should be the real headline here? While I find it insane, and others will disagree, it's the real talking point which ever side you sit on!

Grue3 10y ago

Greater fool theory in action. Hope the people who bought it at IPO sold it fast enough.

deleted 10y ago

[deleted]

kfkhalili 10y ago

"Disappearing photos" is a silly concept. Why would anyone buy shares in that?

daliwali 10y ago

This IPO is yet another indicator of a civilization in decline. Snapchat watches people in their most private, most intimate moments, who are unaware that all of their data passes through centralized servers. Why should states even bother with intrusive surveillance anymore, when people freely offer to surveil themselves? If Snapchat disappeared tomorrow, people would just upload their nude photos elsewhere. Nothing of value would be lost, except for maybe the world's largest, most centralized pornography database, with fairly reliable correlation to real identities. That could never lead to abuse of power.

nailer 10y ago
> Snapchat watches people in their most private, most intimate moments, who are unaware that all of their data passes through centralized servers. I think most people who use Snapchat are still aware that Snapchat can see their nudes.
- daliwali 10y ago
  The average Snapchat user isn't going to think about the process of uploading a picture to a central server which is then relayed to the intended recipients and then deleted on the proprietary client-side application (which can be worked around, the problem is that third-party may retain data indefinitely). The average consumer is not that technically literate, consider the people who think Facebook = Internet.
- xenotb 10y ago
  You might be surrounded by well above-average technical literacy people. I woud guess that even of the people that are aware of how centralized messaging servers work, most don't think about it for months at a time.

wayn3 10y ago

Here's one thing people somehow don't understand. An IPO is a mechanism for a company (and its investors and other stakeholders) to sell shares in exchange for money. The investment bank that facilitates the IPO has the job of "marketing" those shares (and doing the administrative stuff around the IPO). The goal in selling something is to get the best possible price. Therefore, a stock price that goes up at the date of the IPO and then declines below the initial price is the GOAL. It means the bank has done its job well. It got the maximum amount of money out of buyers. If the price stood level, it would mean the bank had left money on the table. If the price went up immediately and then STOOD THERE, it would mean the bank severely underpriced the IPO. Thats the worst case scenario. If the price dips immediately and nobody buys, it just means the IPO was overpriced. This also means that buying at IPO means that you're getting screwed unless you want to hold longterm. You're always paying a premium, unless you believe that the investment bank made a mistake. And you obviously have more data to make that bet than goldman sachs does. Obviously. As a smalltime investor, for whom there is essentially unlimited liquidity in the market, just don't buy IPOs. And don't get excited over IPOs dipping below opening price. It just means you don't understand the mechanism.

bko 10y ago
Just note that the stock price is down below first day close. The original owners sold at open price which was 17. The price is now ~24, so its up nearly 40% since initial open.
- gettingreadyhn 10y ago
  some of the original owners might be "locked" and unable to sell for some time. if you say original investors - then that should be reported and available for public to see soon.
- wayn3 10y ago
  i believe that anyone who held significant stock prior to IPO is locked out of at least selling for a couple months - SEC probably has some regulations regarding that kind of thing.
10y ago

holri 10y ago

'Weighting the evidence objectively, the intelligent investor should conclude that IPO does not stand only for "initial public offering". More accurately, it is also shorthand for: It's Probably Overpriced, Imaginary Profits Only, Insiders' Private Opportunity, or Idiotic, Preposterous and Outrageous.', Benjamin Graham

remyp 10y ago

The borrow rate my broker (IB) is quoting is 120% despite only 7.55% of the float being short. I guess the clearing firms just don't have any shares to lend out -- we could see another price drop once the stock is easier to borrow.

huffmsa 10y ago

ooo wowww, who _ever_ would have seen this coming?