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Looked at SNAP stock market analysis.. Net Income: -487.96M Public companies that cannot turn profitability will be under microscope during the 'current/com

Looked at SNAP stock market analysis.. Net Income: -487.96M Public companies that cannot turn profitability will be under microscope during the 'current/coming' recession. Yanking 20% staff is not going to turn SNAP profitable.

jeffbee 4y ago
If they actually save a net $500 million annually, as they are claiming, then this move will absolutely turn SNAP profitable.
- johannes1234321 4y ago
  They don't only reduce cost, but by shutting down products also lose revenue.
  - onlyrealcuzzo 4y ago
    Those products don't make any meaningful amounts of revenue. That's going to be a rounding error.
    - johannes1234321 4y ago
      Still the maths not necessarily goes the way the GP posted. They won't necessarily become net positive.
      - onlyrealcuzzo 4y ago
        It's more likely they won't become profitable because they overestimated how much they'll save - not because they underestimated how much they'll lose.
  - myth_drannon 4y ago
    Well, they have the financials but the products that were shut down were the most unprofitable ventures?
  - countvonbalzac 4y ago
    But how much revenue do they actually make from games and drones?
  - nawgz 4y ago
    But products cost money to run and maintain - isn't it perfectly plausible they were able to identify 20% of the people worked on a set of products that were in totality not profitable or even costing money? Given the nature of branching from your core competencies into dice rolls, that sounds not just plausible to me, but even probable. Maybe I am missing something though.
time_to_smile 4y ago
But look at their stock price today, up nearly 10% on the news of layoffs. I've been saying this a lot but nobody really want to hear it: unprofitable tech companies only make sense when money is cheap and consumer spending is high. Both of these preconditions are changing at the same time. Wall street is going to continually put pressure on unprofitable companies to rapidly reduce costs, and reward those that do. You are correct that this huge cut is not enough, but it's enough for wall street to gain more confidence in snap for now. If you work at an unprofitable (or even rapidly decreasing in profits) tech company, especially one that's IPO'd, expect layoffs. This is the case for me and I am very seriously expecting massive layoffs coming in October, I have been since May, hoping to dodge the bullet but not optimistic. And this is not going to be like the pandemic where you can be laid off from a negatively impacted company and quickly get rehired by a positively impacted company because this time there are no positively impacted companies.
nawgz 4y ago
> Yanking 20% staff is not going to turn SNAP profitable I'm not sure I follow your logic. SNAP claims they'll save $500M per year by laying off 20%, which I'm sure you can see the reasoning behind given the only number you've posted...
lossolo 4y ago
Anecdotally I'm -61% on SNAP in my portfolio, great investment on my side..

jeffbee 4y ago

If they actually save a net $500 million annually, as they are claiming, then this move will absolutely turn SNAP profitable.

johannes1234321 4y ago
They don't only reduce cost, but by shutting down products also lose revenue.
- onlyrealcuzzo 4y ago
  Those products don't make any meaningful amounts of revenue. That's going to be a rounding error.
  - johannes1234321 4y ago
    Still the maths not necessarily goes the way the GP posted. They won't necessarily become net positive.
    - onlyrealcuzzo 4y ago
      It's more likely they won't become profitable because they overestimated how much they'll save - not because they underestimated how much they'll lose.
- myth_drannon 4y ago
  Well, they have the financials but the products that were shut down were the most unprofitable ventures?
- countvonbalzac 4y ago
  But how much revenue do they actually make from games and drones?
- nawgz 4y ago
  But products cost money to run and maintain - isn't it perfectly plausible they were able to identify 20% of the people worked on a set of products that were in totality not profitable or even costing money? Given the nature of branching from your core competencies into dice rolls, that sounds not just plausible to me, but even probable. Maybe I am missing something though.

time_to_smile 4y ago

But look at their stock price today, up nearly 10% on the news of layoffs. I've been saying this a lot but nobody really want to hear it: unprofitable tech companies only make sense when money is cheap and consumer spending is high. Both of these preconditions are changing at the same time. Wall street is going to continually put pressure on unprofitable companies to rapidly reduce costs, and reward those that do. You are correct that this huge cut is not enough, but it's enough for wall street to gain more confidence in snap for now. If you work at an unprofitable (or even rapidly decreasing in profits) tech company, especially one that's IPO'd, expect layoffs. This is the case for me and I am very seriously expecting massive layoffs coming in October, I have been since May, hoping to dodge the bullet but not optimistic. And this is not going to be like the pandemic where you can be laid off from a negatively impacted company and quickly get rehired by a positively impacted company because this time there are no positively impacted companies.

nawgz 4y ago

> Yanking 20% staff is not going to turn SNAP profitable I'm not sure I follow your logic. SNAP claims they'll save $500M per year by laying off 20%, which I'm sure you can see the reasoning behind given the only number you've posted...

lossolo 4y ago

Anecdotally I'm -61% on SNAP in my portfolio, great investment on my side..