7 ms·

Seems like kind of a prime time to increase your holding if you bought shares on the IPO and have any faith in the vision of the company. Having such an intense

Seems like kind of a prime time to increase your holding if you bought shares on the IPO and have any faith in the vision of the company. Having such an intense fight against such a dominating company could kill Snap, or it could be the disadvantage they need to be successful in the long term. How often is it that the now-huge tech (or any industry) firms DON'T go through trying times when they first appeared on the markets? -Apple kicked Steve Jobs out of the company convinced the monolithic giant IBM was going to cut them out of the equation. -Amazon almost went bankrupt when the market crashed -Facebook dropped for almost a year when it wasn't obvious how they were going to monetize their mobile platform profitably -Nike got hit with a customs battle brought on by Converse for millions Obviously it remains to be seen whether they will show the resilience the aforementioned companies did but the fact that some are already speaking of Snap in the past tense is kind of crazy, they've had ONE quarterly report come out since the IPO.

mrleinad 9y ago
This is the analysis I make based on what someone with a lot more experience in the markets told me a few days ago, related to $SNAP. - Apple was a company that sold computers. SJ being kicked was an relevant event for the company, but it still sold computers and was worth something. - Amazon was an intermediary between sellers and buyers. Today is a company that invested a lot in other things and is worth something. - Facebook could be monetizing something, but it's still just a webpage. Remains to be seen if it's worth something, so their shares are crap (this is from a fundamental point of view, regardless of whether they keep rising) - Nike sells shoes. It's worth something, though it's not a fundamental company for the market. SNAP, on the other hand, has some face recognition algorithms, and created a free app. That's it. It produces nothing. It's a worthless company when it comes down to the assets it has and the product it sells.
- PKop 9y ago
  SNAP might be a terrible investment at this point (I tend to think so because I don't think they can overcome challenge from Facebook) but based only on your points above, we'd have to conclude Google is "worthless" as well no? Selling something vs nothing is a good metric to think about, but "advertising" is certainly not nothing. In fact, it's a multi-billion $ industry. It just so happens to be dominated by Google and FB currently, who are both "fundamentally" selling something real.
- wonder_bread 9y ago
  I'm not entirely sure what you're getting it because it seems like your making a pretty strong correlation between companies that provide physical goods as necessities and thus are worth more than those that provide digital goods that you could argue aren't. I'd argue that's increasingly not going to be true. I think one could've argued at the time that Apple wasn't worth something because they were the struggling vertically integrated supplier of consumer based computers in a sea of horizontally integrated providers. It wasn't until they got more of a foothold everybody started seeing the benefits of software made to run on a single type of device. Intermediaries have increasingly become devalued over time as digitization has meant there's less and less of a need for middle-men. Hence why Amazon's surge has come on the heels of providing Entertainment and Cloud services, something intermediaries in their space never did before. Facebook yeah I suppose, the fact that they have margins almost no other company could dream of kind of rationalizes it to a strong degree though. All in all, I see where you're coming from. Nike yes I see where you're coming from. Disclaimer me posting that comment wasn't suppose to be a riot act that Snap's going to be the next $400+ billion dollar company, I'm as skeptical as most about the future prospects. However, I'd argue against saying they produce nothing. The fact that they are anti to the leading social media provider (of sorts) gives them a production point. As demonstrated in their reports, their user's incessant check in's on the app despite any Facebook-esque notification stream to keep them coming back is pretty envious (in my opinion).
- lawrenceyan 9y ago
  You clearly have failed to see the absolutely mindbogglingly behemoth Facebook has become behind the scenes. The amount of personalized data they have surpasses even Google's at this point. I fear for those that don't take Facebook seriously, and not just in the financial sense either. Data is devastatingly powerful, and with power comes the potential for both great good and great evil.
- askafriend 9y ago
  This is an incredibly flawed argument and comes from an incredibly flawed perspective on “worth”. The most valuable thing Facebook has is distribution and that is absolutely worth A LOT. Not only that, but it has unprecedented global distribution backed by engagement numbers that keep the value afloat. You’re trying to impose the values of a physical goods economy onto one that is purely digital and the concepts don’t translate. Whoever that "someone" is, probably isn't as experienced in the markets as you think.
  - mrleinad 9y ago
    I know for a fact he has over 25 years experience in the markets. The concepts don't translate, that's for sure. However, to claim that Facebook is worth something if they just keep collecting data and we see nothing being done with that, is just wishful thinking. Amazon invests in research and built a PaaS/SaaS service that's worth a lot. It innovates on several products like Kindle and Echo. Owns patents that are worth something. What's the ACTUAL commercial value that Facebook is bringing to the world and to people that's making it so worthwhile? Sharing pics? Getting customized newsfeeds? Having yet another channel to communicate with your aunt or with that customer service? What do we lose if Facebook goes away tomorrow?
    - askafriend 9y ago
      The actual commercial value is what I stated: unprecedented global distribution driven by content (some of which is user-generated and some of which is partner-generated). It's the model that has worked for TV, Radio, and Newspapers but in the new world the integration points are different from those old models making the chain of value much different. Here's a short article that'll help explain it better than I can: https://stratechery.com/2015/aggregation-theory/ https://stratechery.com/2015/aggregation-theory/ By your friend's logic, AirBnB doesn't have any value either.
      - mrleinad 9y ago
        Exactly. The same logic applies. It's a glorified hotel reservation site.
lazerpants 9y ago
Pets.com went through an awfully hard time too...
- wonder_bread 9y ago
  Lol, as did Twitter, as did Diapers.com, as did a thousand others this isn't me saying "Now's the time everybody! Pour your entire retirement fund into SNAP before it's too late!" it's an admonishment for the short-sellers sucking in the inevitable negative media headlines around any hot IPO as fact.
  - whatok 9y ago
    Snapchat's financials are atrocious compared to any of the companies you listed and growth by all sorts of metrics is slowing. There's a difference.
    - wonder_bread 9y ago
      You're telling me Amazon's financials were beautiful when they IPO'd? They're barely pretty now.
      - whatok 9y ago
        Amazon IPOed at $438mm in 1997. Inflation adjusted that's $668mm. Snapchat's current market cap is $20bn. Not even in the same remote universe. https://www.cnet.com/news/amazon-com-ipo-skyrockets/ https://www.cnet.com/news/amazon-com-ipo-skyrockets/
        wonder_bread 9y ago
        So because Snap has a higher market cap means there's no excuse for the messy financials? Show me all the money Amazon was making when it was worth $20B.
        9y ago
rbranson 9y ago
You are suffering from survivorship bias here. Most companies don't make it through such trying times, but those you cite succeeded against the odds to become these seemingly unstoppable behemoths. It is true that all these high-growth companies go through major adversity on their way to the top, but this is where most end up failing. Just like every other high-growth company, Snap's valuation is predicated on atypical future results. Even without adversity they have a tough road ahead. I would posit that there's a good chance the executive team & investors saw the writing on the wall and took the company public to get out before it totally collapsed. It was a pretty strong signal that Evan & Bobby are primarily money-driven when they took $10M each off the table during the B round. Other notable companies where founders have done this sort of thing have resulted in fast spike-and-collapse results: Foursquare, Zynga, and Groupon. Zuck didn't take an early multi-million dollar cash-out. The Instagram founders didn't either -- they were living in 1-bedroom apartments a year after the acquisition. Founders who believe in the long-term success of a company don't tend to get rich off a company that has not yet attained either their vision or produce significant wealth for itself. Obviously causation != correlation, but this is a pretty strong signal about the motivations of the founding team. It's certainly their prerogative to cash out early. I'm not making a moral judgement here. However, as a value investor this is a useful signal for high-growth tech companies. This all sounds incredibly cliche, but I just don't see signals that lead me to believe Evan & Bobby have motivations in the same category as Bezos or Zuck or Jobs. All the signals are that they appear to be looking to get rich to live a life of luxury, not build their life around their company. As a human, I personally would prefer the former. As an investor and employee, I want to put my money and time into companies lead by the later. [Disclosure: Former Instagram & Facebook employee. I don't currently own any Facebook shares]
- wonder_bread 9y ago
  see response to lazerpants
- msnower 9y ago
  To add to this, Snap's S1 stated that Spiegel was receiving millions in annual compensation.

mrleinad 9y ago

This is the analysis I make based on what someone with a lot more experience in the markets told me a few days ago, related to $SNAP. - Apple was a company that sold computers. SJ being kicked was an relevant event for the company, but it still sold computers and was worth something. - Amazon was an intermediary between sellers and buyers. Today is a company that invested a lot in other things and is worth something. - Facebook could be monetizing something, but it's still just a webpage. Remains to be seen if it's worth something, so their shares are crap (this is from a fundamental point of view, regardless of whether they keep rising) - Nike sells shoes. It's worth something, though it's not a fundamental company for the market. SNAP, on the other hand, has some face recognition algorithms, and created a free app. That's it. It produces nothing. It's a worthless company when it comes down to the assets it has and the product it sells.

PKop 9y ago
SNAP might be a terrible investment at this point (I tend to think so because I don't think they can overcome challenge from Facebook) but based only on your points above, we'd have to conclude Google is "worthless" as well no? Selling something vs nothing is a good metric to think about, but "advertising" is certainly not nothing. In fact, it's a multi-billion $ industry. It just so happens to be dominated by Google and FB currently, who are both "fundamentally" selling something real.
wonder_bread 9y ago
I'm not entirely sure what you're getting it because it seems like your making a pretty strong correlation between companies that provide physical goods as necessities and thus are worth more than those that provide digital goods that you could argue aren't. I'd argue that's increasingly not going to be true. I think one could've argued at the time that Apple wasn't worth something because they were the struggling vertically integrated supplier of consumer based computers in a sea of horizontally integrated providers. It wasn't until they got more of a foothold everybody started seeing the benefits of software made to run on a single type of device. Intermediaries have increasingly become devalued over time as digitization has meant there's less and less of a need for middle-men. Hence why Amazon's surge has come on the heels of providing Entertainment and Cloud services, something intermediaries in their space never did before. Facebook yeah I suppose, the fact that they have margins almost no other company could dream of kind of rationalizes it to a strong degree though. All in all, I see where you're coming from. Nike yes I see where you're coming from. Disclaimer me posting that comment wasn't suppose to be a riot act that Snap's going to be the next $400+ billion dollar company, I'm as skeptical as most about the future prospects. However, I'd argue against saying they produce nothing. The fact that they are anti to the leading social media provider (of sorts) gives them a production point. As demonstrated in their reports, their user's incessant check in's on the app despite any Facebook-esque notification stream to keep them coming back is pretty envious (in my opinion).
lawrenceyan 9y ago
You clearly have failed to see the absolutely mindbogglingly behemoth Facebook has become behind the scenes. The amount of personalized data they have surpasses even Google's at this point. I fear for those that don't take Facebook seriously, and not just in the financial sense either. Data is devastatingly powerful, and with power comes the potential for both great good and great evil.
askafriend 9y ago
This is an incredibly flawed argument and comes from an incredibly flawed perspective on “worth”. The most valuable thing Facebook has is distribution and that is absolutely worth A LOT. Not only that, but it has unprecedented global distribution backed by engagement numbers that keep the value afloat. You’re trying to impose the values of a physical goods economy onto one that is purely digital and the concepts don’t translate. Whoever that "someone" is, probably isn't as experienced in the markets as you think.
- mrleinad 9y ago
  I know for a fact he has over 25 years experience in the markets. The concepts don't translate, that's for sure. However, to claim that Facebook is worth something if they just keep collecting data and we see nothing being done with that, is just wishful thinking. Amazon invests in research and built a PaaS/SaaS service that's worth a lot. It innovates on several products like Kindle and Echo. Owns patents that are worth something. What's the ACTUAL commercial value that Facebook is bringing to the world and to people that's making it so worthwhile? Sharing pics? Getting customized newsfeeds? Having yet another channel to communicate with your aunt or with that customer service? What do we lose if Facebook goes away tomorrow?
  - askafriend 9y ago
    The actual commercial value is what I stated: unprecedented global distribution driven by content (some of which is user-generated and some of which is partner-generated). It's the model that has worked for TV, Radio, and Newspapers but in the new world the integration points are different from those old models making the chain of value much different. Here's a short article that'll help explain it better than I can: https://stratechery.com/2015/aggregation-theory/ https://stratechery.com/2015/aggregation-theory/ By your friend's logic, AirBnB doesn't have any value either.
    - mrleinad 9y ago
      Exactly. The same logic applies. It's a glorified hotel reservation site.

lazerpants 9y ago

Pets.com went through an awfully hard time too...

wonder_bread 9y ago
Lol, as did Twitter, as did Diapers.com, as did a thousand others this isn't me saying "Now's the time everybody! Pour your entire retirement fund into SNAP before it's too late!" it's an admonishment for the short-sellers sucking in the inevitable negative media headlines around any hot IPO as fact.
- whatok 9y ago
  Snapchat's financials are atrocious compared to any of the companies you listed and growth by all sorts of metrics is slowing. There's a difference.
  - wonder_bread 9y ago
    You're telling me Amazon's financials were beautiful when they IPO'd? They're barely pretty now.
    - whatok 9y ago
      Amazon IPOed at $438mm in 1997. Inflation adjusted that's $668mm. Snapchat's current market cap is $20bn. Not even in the same remote universe. https://www.cnet.com/news/amazon-com-ipo-skyrockets/ https://www.cnet.com/news/amazon-com-ipo-skyrockets/
      - wonder_bread 9y ago
        So because Snap has a higher market cap means there's no excuse for the messy financials? Show me all the money Amazon was making when it was worth $20B.
        9y ago

rbranson 9y ago

You are suffering from survivorship bias here. Most companies don't make it through such trying times, but those you cite succeeded against the odds to become these seemingly unstoppable behemoths. It is true that all these high-growth companies go through major adversity on their way to the top, but this is where most end up failing. Just like every other high-growth company, Snap's valuation is predicated on atypical future results. Even without adversity they have a tough road ahead. I would posit that there's a good chance the executive team & investors saw the writing on the wall and took the company public to get out before it totally collapsed. It was a pretty strong signal that Evan & Bobby are primarily money-driven when they took $10M each off the table during the B round. Other notable companies where founders have done this sort of thing have resulted in fast spike-and-collapse results: Foursquare, Zynga, and Groupon. Zuck didn't take an early multi-million dollar cash-out. The Instagram founders didn't either -- they were living in 1-bedroom apartments a year after the acquisition. Founders who believe in the long-term success of a company don't tend to get rich off a company that has not yet attained either their vision or produce significant wealth for itself. Obviously causation != correlation, but this is a pretty strong signal about the motivations of the founding team. It's certainly their prerogative to cash out early. I'm not making a moral judgement here. However, as a value investor this is a useful signal for high-growth tech companies. This all sounds incredibly cliche, but I just don't see signals that lead me to believe Evan & Bobby have motivations in the same category as Bezos or Zuck or Jobs. All the signals are that they appear to be looking to get rich to live a life of luxury, not build their life around their company. As a human, I personally would prefer the former. As an investor and employee, I want to put my money and time into companies lead by the later. [Disclosure: Former Instagram & Facebook employee. I don't currently own any Facebook shares]

wonder_bread 9y ago
see response to lazerpants
msnower 9y ago
To add to this, Snap's S1 stated that Spiegel was receiving millions in annual compensation.