4 ms·

Isn't this what happened with FB as well?

by sfilargi 10y ago

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

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