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Does anyone see a path to Snap continuing to exist 10 years from now? I just don't see what they bring to the table that can possibly keep them afloat much lon

by koboll 8y ago

Does anyone see a path to Snap continuing to exist 10 years from now? I just don't see what they bring to the table that can possibly keep them afloat much longer.

daeken 8y ago
Diversification. They won't be able to survive on just Snapchat, but they have the money to build/buy some other properties.
- minimaxir 8y ago
  That was partially the objective of the Spectacles. (diversification into hardware) It didn't go well.
- npunt 8y ago
  My guess is they effectively become Venice Beach Real Estate and IP Holding Co. Happens a lot with formerly high flying companies that don't know how to spend their $$ and just buy buildings.
- adventured 8y ago
  They've vaporized $600m in cash in the last three quarters. They're running a negative $300m operating loss quarterly. They're barely going to have enough money to safely survive as is for another six quarters (before the pressure gets overwhelming to sell or cut limbs off), much less have enough money to build or buy other properties. You can't buy much diversification against a $300m operating loss with a few hundred million in cash, that they can currently theoretically spare. They have an extraordinarily mismanaged business and operating cost situation. Calling it wild incompetence wouldn't do it justice. They have two choices. Slash and burn immediately, all the way down to the core product viability. That should have been done over a year ago when it was obvious the growth was gone and the bleed was going to kill them. Or sell, the sooner the better; now here they are, in a death spiral, having already waited too long to sell. They have to cut their quarterly cash burn down to sub $50m within four or five quarters to remain viable as an independent company. And by that point, the stock might get cut in half again. This is still a high multiple / bubbly market, if that changes they go from an $8b valuation to a $2b valuation, if they're lucky.
seibelj 8y ago
Acquisition by Apple / Amazon / Google once the price is low enough. They have 100mil+ DAUs of an attractive demographic to advertisers (unless they are lying), but they can’t monetize and their costs are too high. Snap could fit into some master plan to break into social.
- cgb223 8y ago
  Why can’t thet monetize? On my Snapchat anyway there are plenty of ads under the stories Are those not paid for?
  - seibelj 8y ago
    They are trying to monetize but it isn’t very effective thus far.
- m_ke 8y ago
  Amazon makes a lot of sense. They're trying to get into advertising and they could turn Snapchat into a shopping lens. ALexa, AWS and Twitch would play with it nicely too.
  - dangoldin 8y ago
    Interesting take. I'm not close enough to either Bezos or Spiegel but that does not seem like a good combination. Although at that point I'm not sure Snap will have a choice.
- jarsin 8y ago
  But you can't buy SNAP by buying the stock. The stock has no voting rights and thus it's price really is not what someone can buy the company for. Spiegel etc still have majority ownership.
  - ThrustVectoring 8y ago
    The majority voters cannot simply freeze out minority shareholders. They can decide to sell if it's in everyone's best interest over remaining independent, though. If the offer isn't for more than what the publicly held shares are worth, then Spiegel et al get sued over selling the company.
sgwae 8y ago
Sell user data on the black market?
raiyu 8y ago
Snap is bringing in significant revenue and they will book over $1B in revenue, the challenge is that revenue growth has slowed significantly. That coupled with high operating costs and headcount expenses leaves them very much in the red. And it's debatable how many quarters this can continue without restructuring or another capital infusion. They have been able to increase revenue per user but still trail Facebook and the growth story pitched at IPO around user growth is the biggest challenge. With the platform stalling in user numbers increasing revenue per user is only one side of the equation. The more damning item is really what they knew during the roadshow and how they disclosed it. Obviously Instagram stories has had a material impact on their business and the "whistleblower" was bringing this to management's attention while being shutdown most likely to not derail the momentum of the IPO. It is quite possible that this may result in fines because there will most likely be a paper trail internally that detailed these issues. Then it's up to a judge to decide if enough disclosure was done. That's the DOJ/SEC issue as for the ten year plan that's even trickier. Anecdotally Instagram delivers more value to advertisers with actual intent and purchases whole snap is more of an awareness play. But as we've seen with MySpace and Digg even high flying priorities can fizzle out as quickly as they give traction. In each case a competitor really takes the lions share of the users and it's obvious that in snaps case that is Instagram. And buying a stalled out social platform is a bad play for any company that's serious about building the future. Given the voting structure I think this will be playing out for a couple of years but at the moment the prospects certainly don't look good and the stock price reflects as much.
- cycrutchfield 8y ago
  >Obviously Instagram stories has had a material impact on their business and the "whistleblower" was bringing this to management's attention The "whistleblower" that was fired after 3 weeks on the job back in 2015 was bringing Instagram stories to management's attention? The Instagram stories that came out in 2016? Was he clairvoyant?
  - roymurdock 8y ago
    2015 whistleblower was claiming Snapchat misreported their user metrics and the lawsuit had nothing to do with Instagram stories. What may have happened is that somehow Snapchat further doctored their numbers after Stories came out to hide the impact it was having on their userbase, then slowly rolled the impact in post IPO leaving the company where it is now, with a sudden slowdown in user growth post IPO and $6 share price down from $24 on first day of trading. same issue of doctored numbers with 2 different timeframes
Jonovono 8y ago
I think what they bring to the table is drastically different than anything else out there. Although, admittedly imo they have lost their ways and people are moving to Instagram as an alternative (myself included). But what separates them, and what they think people will eventually realize is that living in the moment is healthier, more rewarding and authentic than doing things for the purpose of likes and attention. Instagram is touching on this with stories that they copied but the entire Instagram platform just feels grimy overall (and snap is starting to feel that way as well with their uncustomizable discovery page). So the path I see is them really focusing on authentic communication, and making the best ways to let friends share their true selves without worrying about likes because that's when you can have more fun. I think instead of being a camera company snap should be the 'moment' company. To me, there are lots of ways to enable people to have engaging experiences with others in the moment outside of a camera. This video by Evan sums up the difference well too: https://www.youtube.com/watch?v=SQYBLeV6sbM&t=7s https://www.youtube.com/watch?v=SQYBLeV6sbM&t=7s and also see Kanyes tweets (https://twitter.com/kanyewest/status/1042779425048211456?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1042779425048211456&ref_url=http%3A%2F%2Fwww.xxlmag.com%2Fnews%2F2018%2F09%2Fkanye-west-jack-dorsey-twitter-changes%2F https://twitter.com/kanyewest/status/1042779425048211456?ref...) on the matter :p
- stanleydrew 8y ago
  > people will eventually realize is that living in the moment is healthier, more rewarding and authentic than doing things for the purpose of likes and attention. I have nothing to back this up other than intuition, but I think this is a stretch. People love and live for attention and validation. That's not to say the world wouldn't be a better place if more of us didn't give a shit about the 'gram or whatever. But it seems like people definitely do, and I don't think we can stop them.
  - Jonovono 8y ago
    Oh totally, it's a big bet that people will come around. Some trends that give me hope is the increased interest in meditation, yoga and the ideas becoming more 'mainstream' with people like Kanye and others talking about it. But still, it's like trying to compete with cocaine and a wild all nighter while you're selling a home cooked meal and a movie with a couple of your close friends that go home before midnight. But I also don't think it has to be one or the other. Both can have their place.
fossuser 8y ago
I'd buy puts - Zuckerberg outplayed them, I don't think they know what they're doing. I don't think they'll be around much longer, it's also interesting that puts a couple years out are pretty expensive so the market doesn't really think there's much hope for them either.
- throwawaymath 8y ago
  Calls and puts are (both) almost always significantly more expensive several years out compared than they are in the present. The longer your time horizon the more uncertainty you have to build into your price, which means you need to account for greater volatility. You shouldn't interpret that as optimism or pessimism in the market, because both long and short derivatives are expensive.
  - alexnewman 8y ago
    No he means the calls are cheap and the puts are expensive. I agree, the smart investors have already put the pressure on
    - throwawaymath 8y ago
      Ah, fair enough. I see that reading now.
sonnyblarney 8y ago
The have a fairly strong incumbent userbase among younger folks who's only other option is instagram. They don't want to be on FB really. So until the next 'cool messaging app' comes along I think they'll maintain an audience.

by koboll 8y ago

Does anyone see a path to Snap continuing to exist 10 years from now? I just don't see what they bring to the table that can possibly keep them afloat much longer.

daeken 8y ago

Diversification. They won't be able to survive on just Snapchat, but they have the money to build/buy some other properties.

minimaxir 8y ago
That was partially the objective of the Spectacles. (diversification into hardware) It didn't go well.
npunt 8y ago
My guess is they effectively become Venice Beach Real Estate and IP Holding Co. Happens a lot with formerly high flying companies that don't know how to spend their $$ and just buy buildings.
adventured 8y ago
They've vaporized $600m in cash in the last three quarters. They're running a negative $300m operating loss quarterly. They're barely going to have enough money to safely survive as is for another six quarters (before the pressure gets overwhelming to sell or cut limbs off), much less have enough money to build or buy other properties. You can't buy much diversification against a $300m operating loss with a few hundred million in cash, that they can currently theoretically spare. They have an extraordinarily mismanaged business and operating cost situation. Calling it wild incompetence wouldn't do it justice. They have two choices. Slash and burn immediately, all the way down to the core product viability. That should have been done over a year ago when it was obvious the growth was gone and the bleed was going to kill them. Or sell, the sooner the better; now here they are, in a death spiral, having already waited too long to sell. They have to cut their quarterly cash burn down to sub $50m within four or five quarters to remain viable as an independent company. And by that point, the stock might get cut in half again. This is still a high multiple / bubbly market, if that changes they go from an $8b valuation to a $2b valuation, if they're lucky.

seibelj 8y ago

Acquisition by Apple / Amazon / Google once the price is low enough. They have 100mil+ DAUs of an attractive demographic to advertisers (unless they are lying), but they can’t monetize and their costs are too high. Snap could fit into some master plan to break into social.

cgb223 8y ago
Why can’t thet monetize? On my Snapchat anyway there are plenty of ads under the stories Are those not paid for?
- seibelj 8y ago
  They are trying to monetize but it isn’t very effective thus far.
m_ke 8y ago
Amazon makes a lot of sense. They're trying to get into advertising and they could turn Snapchat into a shopping lens. ALexa, AWS and Twitch would play with it nicely too.
- dangoldin 8y ago
  Interesting take. I'm not close enough to either Bezos or Spiegel but that does not seem like a good combination. Although at that point I'm not sure Snap will have a choice.
jarsin 8y ago
But you can't buy SNAP by buying the stock. The stock has no voting rights and thus it's price really is not what someone can buy the company for. Spiegel etc still have majority ownership.
- ThrustVectoring 8y ago
  The majority voters cannot simply freeze out minority shareholders. They can decide to sell if it's in everyone's best interest over remaining independent, though. If the offer isn't for more than what the publicly held shares are worth, then Spiegel et al get sued over selling the company.

sgwae 8y ago

Sell user data on the black market?

raiyu 8y ago

Snap is bringing in significant revenue and they will book over $1B in revenue, the challenge is that revenue growth has slowed significantly. That coupled with high operating costs and headcount expenses leaves them very much in the red. And it's debatable how many quarters this can continue without restructuring or another capital infusion. They have been able to increase revenue per user but still trail Facebook and the growth story pitched at IPO around user growth is the biggest challenge. With the platform stalling in user numbers increasing revenue per user is only one side of the equation. The more damning item is really what they knew during the roadshow and how they disclosed it. Obviously Instagram stories has had a material impact on their business and the "whistleblower" was bringing this to management's attention while being shutdown most likely to not derail the momentum of the IPO. It is quite possible that this may result in fines because there will most likely be a paper trail internally that detailed these issues. Then it's up to a judge to decide if enough disclosure was done. That's the DOJ/SEC issue as for the ten year plan that's even trickier. Anecdotally Instagram delivers more value to advertisers with actual intent and purchases whole snap is more of an awareness play. But as we've seen with MySpace and Digg even high flying priorities can fizzle out as quickly as they give traction. In each case a competitor really takes the lions share of the users and it's obvious that in snaps case that is Instagram. And buying a stalled out social platform is a bad play for any company that's serious about building the future. Given the voting structure I think this will be playing out for a couple of years but at the moment the prospects certainly don't look good and the stock price reflects as much.

cycrutchfield 8y ago
>Obviously Instagram stories has had a material impact on their business and the "whistleblower" was bringing this to management's attention The "whistleblower" that was fired after 3 weeks on the job back in 2015 was bringing Instagram stories to management's attention? The Instagram stories that came out in 2016? Was he clairvoyant?
- roymurdock 8y ago
  2015 whistleblower was claiming Snapchat misreported their user metrics and the lawsuit had nothing to do with Instagram stories. What may have happened is that somehow Snapchat further doctored their numbers after Stories came out to hide the impact it was having on their userbase, then slowly rolled the impact in post IPO leaving the company where it is now, with a sudden slowdown in user growth post IPO and $6 share price down from $24 on first day of trading. same issue of doctored numbers with 2 different timeframes

Jonovono 8y ago

I think what they bring to the table is drastically different than anything else out there. Although, admittedly imo they have lost their ways and people are moving to Instagram as an alternative (myself included). But what separates them, and what they think people will eventually realize is that living in the moment is healthier, more rewarding and authentic than doing things for the purpose of likes and attention. Instagram is touching on this with stories that they copied but the entire Instagram platform just feels grimy overall (and snap is starting to feel that way as well with their uncustomizable discovery page). So the path I see is them really focusing on authentic communication, and making the best ways to let friends share their true selves without worrying about likes because that's when you can have more fun. I think instead of being a camera company snap should be the 'moment' company. To me, there are lots of ways to enable people to have engaging experiences with others in the moment outside of a camera. This video by Evan sums up the difference well too: https://www.youtube.com/watch?v=SQYBLeV6sbM&t=7s https://www.youtube.com/watch?v=SQYBLeV6sbM&t=7s and also see Kanyes tweets (https://twitter.com/kanyewest/status/1042779425048211456?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1042779425048211456&ref_url=http%3A%2F%2Fwww.xxlmag.com%2Fnews%2F2018%2F09%2Fkanye-west-jack-dorsey-twitter-changes%2F https://twitter.com/kanyewest/status/1042779425048211456?ref...) on the matter :p

stanleydrew 8y ago
> people will eventually realize is that living in the moment is healthier, more rewarding and authentic than doing things for the purpose of likes and attention. I have nothing to back this up other than intuition, but I think this is a stretch. People love and live for attention and validation. That's not to say the world wouldn't be a better place if more of us didn't give a shit about the 'gram or whatever. But it seems like people definitely do, and I don't think we can stop them.
- Jonovono 8y ago
  Oh totally, it's a big bet that people will come around. Some trends that give me hope is the increased interest in meditation, yoga and the ideas becoming more 'mainstream' with people like Kanye and others talking about it. But still, it's like trying to compete with cocaine and a wild all nighter while you're selling a home cooked meal and a movie with a couple of your close friends that go home before midnight. But I also don't think it has to be one or the other. Both can have their place.

fossuser 8y ago

I'd buy puts - Zuckerberg outplayed them, I don't think they know what they're doing. I don't think they'll be around much longer, it's also interesting that puts a couple years out are pretty expensive so the market doesn't really think there's much hope for them either.

throwawaymath 8y ago
Calls and puts are (both) almost always significantly more expensive several years out compared than they are in the present. The longer your time horizon the more uncertainty you have to build into your price, which means you need to account for greater volatility. You shouldn't interpret that as optimism or pessimism in the market, because both long and short derivatives are expensive.
- alexnewman 8y ago
  No he means the calls are cheap and the puts are expensive. I agree, the smart investors have already put the pressure on
  - throwawaymath 8y ago
    Ah, fair enough. I see that reading now.

sonnyblarney 8y ago

The have a fairly strong incumbent userbase among younger folks who's only other option is instagram. They don't want to be on FB really. So until the next 'cool messaging app' comes along I think they'll maintain an audience.