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Old 02-03-2017, 12:37 PM   #1
DuckU
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SnapChat IPO

I'm curious what people think about SnapChat's IPO, will it be a buy (e.g. Facebook, Amazon, Apple Netflix, Google, etc...) or a sell (e.g. GoPro, Twitter, etc..). Specifically do people see continued growth with ramp up of Spectacle or will it be a "flash in the pan" soon replaced by another app and Virtual Reality play with millennials Gen Xer's?

Here are the details from Business Insider
Snapchat released their financial details in its filing for an initial public offering on Thursday, February 2, 2017.

Snapchat's parent company Snap Inc. set in motion what could be the biggest tech flotation in years by revealing it generates over $400 million in annual sales and has 158 million people using its app on a daily basis.

The company filed for a $3 billion IPO, though that is a placeholder amount and certain to change as the company sets a price on the deal.

-In the filing, Snap disclosed that Snapchat has 158 million average daily active users as of the fourth quarter of 2016.

-It had annual revenue of $404.4 million in 2016, up from $58.6 million in 2015.

It plans to list its shares on the New York Stock Exchange under the ticker SNAP.
Now that its financial statements are public, the company must wait 15 days before holding formal meetings, aka the IPO "roadshow," with investors. Snap is planning to list shares in March, and could fetch a valuation of as much as $25 billion, people familiar with the matter have said.
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Old 02-03-2017, 01:39 PM   #2
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Re: SnapChat IPO

http://finance.yahoo.com/news/snap-o...213725285.html

Quote:
"We have incurred operating losses in the past, expect to incur operating losses in the future, and may never achieve or maintain profitability," the filing said. Other similar companies, like Twitter (TWTR), have also included similar language in their public offerings.
Quote:
"The majority of our users are 18-34 years old," the filing said. "This demographic may be less brand loyal and more likely to follow trends than other demographics ... Snapchat also may not be able to penetrate other demographics in a meaningful manner. For example, users 25 and older visited Snapchat approximately 12 times and spent approximately 20 minutes on Snapchat every day on average in the quarter ended December 31, 2016, while users younger than 25 visited Snapchat over 20 times and spent over 30 minutes on Snapchat every day on average during the same period."
also read somewhere that they stalled in q4 on daily users (cant find source)

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Old 02-03-2017, 08:11 PM   #3
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Re: SnapChat IPO

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Old 02-03-2017, 09:48 PM   #4
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Re: SnapChat IPO

Think this could be a pass. Overhyped
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Old 02-03-2017, 09:55 PM   #5
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Re: SnapChat IPO

$25billion for an app that lets you send pictures of yourself with a dog emojiface (while insta clicking through any ad) seems right up there with pets dot com. Maybe I'm wrong and that take looks super trash ten years from now, but the way these people spin advertising hits and analytics seems like a boiler room operation to appease old rich people who will just buy the top of whatever they think is the next facebook.
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Old 02-03-2017, 10:42 PM   #6
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Re: SnapChat IPO

Shorting. Dumb and over valued
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Old 02-03-2017, 11:00 PM   #7
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Re: SnapChat IPO

$25 billion valuation is beyond insane. They picked a very good time to cash out their big investors when the DOW is at all time highs 20k.
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Old 02-03-2017, 11:46 PM   #8
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Re: SnapChat IPO

Quote:
Originally Posted by Clayton View Post
$25billion for an app that lets you send pictures of yourself with a dog emojiface (while insta clicking through any ad) seems right up there with pets dot com. Maybe I'm wrong and that take looks super trash ten years from now, but the way these people spin advertising hits and analytics seems like a boiler room operation to appease old rich people who will just buy the top of whatever they think is the next facebook.
But if it was a marijuana stock trading at 400 times earnings, you'd be all over it.
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Old 02-04-2017, 12:08 AM   #9
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Re: SnapChat IPO

Quote:
Originally Posted by Clayton View Post
$25billion for an app that lets you send pictures of yourself with a dog emojiface (while insta clicking through any ad) seems right up there with pets dot com. Maybe I'm wrong and that take looks super trash ten years from now, but the way these people spin advertising hits and analytics seems like a boiler room operation to appease old rich people who will just buy the top of whatever they think is the next facebook.
Snapchat is a huge social media powerhouse and is here to stay. The dog emojiface that slims your face and makes you prettier is one of the reasons it's so popular. I understand why people think it's ridiculous, particularly if they're from an older generation, but any analysis that includes calling it a fad shouldn't be taken seriously.

Monetization and valuation are obviously the important questions, and $25B feels pretty expensive to me.
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Old 02-04-2017, 12:23 AM   #10
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Re: SnapChat IPO

Wonder if it'll follow Facebook, fall through the floor instantly and then go gangbusters

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Old 02-04-2017, 02:14 AM   #11
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Re: SnapChat IPO

Have been reading up to see if how much/little potential there might be for Snap to possibly turn a profit in the future - and a couple of articles were saying that they're struggling to turn a profit because cloud storage is so expensive ... guess Google cloud storage is costing them $400mil/yr?

Probably better to buy Google instead?
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Old 02-04-2017, 11:35 AM   #12
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Re: SnapChat IPO

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Originally Posted by TrustySam View Post
Have been reading up to see if how much/little potential there might be for Snap to possibly turn a profit in the future - and a couple of articles were saying that they're struggling to turn a profit because cloud storage is so expensive ... guess Google cloud storage is costing them $400mil/yr?

Probably better to buy Google instead?
This +1
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Old 02-04-2017, 11:43 AM   #13
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Re: SnapChat IPO

Could someone outline a $200 billion valuation bull case? A $trillion valuation bull case?

If not, stay away.
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Old 02-04-2017, 12:29 PM   #14
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Re: SnapChat IPO

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Originally Posted by stinkypete View Post
Snapchat is a huge social media powerhouse and is here to stay. The dog emojiface that slims your face and makes you prettier is one of the reasons it's so popular. I understand why people think it's ridiculous, particularly if they're from an older generation, but any analysis that includes calling it a fad shouldn't be taken seriously.

Monetization and valuation are obviously the important questions, and $25B feels pretty expensive to me.
Snapchat is not a huge social media powerhouse. I would call facebook that. Instagram pretty much killed it lately and all the sudden after instagram released its own snaps they are IPO'ng. Sounds like the founding investors are scared and cashing out at a absurdly stupid expensive valuation.
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Old 02-04-2017, 06:49 PM   #15
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Re: SnapChat IPO

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Originally Posted by AllinPoker View Post
Snapchat is not a huge social media powerhouse. I would call facebook that. Instagram pretty much killed it lately and all the sudden after instagram released its own snaps they are IPO'ng. Sounds like the founding investors are scared and cashing out at a absurdly stupid expensive valuation.
Obviously you would say the biggest player by far in the space and the world's first trillion dollar company is a powerhouse.

That doesn't mean snapchat isn't. It's a little more niche but it still has 100M+ users, a lot of them way more active than they are on facebook. If you think instagram killed snapchat, you're just wrong.

I tend to agree with TS though that if the $200B bull case isn't pretty obvious, then a $25B valuation at the moment is pretty ridiculous. And imo there isn't a clear monetization path that would get snapchat anywhere near a $200B valuation.
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Old 02-04-2017, 07:34 PM   #16
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Re: SnapChat IPO

lol, is there really someone who buys into IPO post 2012?

garbage.

they are also make fun of "shareholders" since they aren't offering any rights, plus they are giving massive power to spiegel... even if he gets fired, he could control the company. This is nuts. nobody has ever done that.

ig stories is a big brake to the growth of this "company". the spending on google cloud is insane and the only way they are going to monetize is reselling data (that users thought was safe to be shared).
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Old 02-04-2017, 07:45 PM   #17
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Re: SnapChat IPO

I don't buy in things that don't make $ and don't appear to have a way to for a long time unless i can easily visualize it. This isn't one.

That's just me and I know nothing, carry on.
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Old 02-04-2017, 08:31 PM   #18
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Re: SnapChat IPO

Quote:
Originally Posted by TrustySam View Post
Have been reading up to see if how much/little potential there might be for Snap to possibly turn a profit in the future - and a couple of articles were saying that they're struggling to turn a profit because cloud storage is so expensive ... guess Google cloud storage is costing them $400mil/yr?

Probably better to buy Google instead?
yeah, i took a look through the S-1 and they spend a large, and increasing, amount google cloud services. from Q1 2015 through Q4 2016 (quarterly basis, globally, DAUs are in millions):
endQ----DAUs--CoR/DAU--Rev/DAU
Mar’15-----81-----0.26-----0.05
June’15-----89-----0.46-----0.06
Sept’15-----99-----0.57-----0.17
Dec’15-----110-----0.59-----0.30
Mar’16-----130-----0.58-----0.30
June’16-----148-----0.64-----0.49
Sept’16-----154-----0.83-----0.83
Dec’16-----161-----0.95-----1.03

cost of revenue (CoR above) is their line item expense that is primarily attributable to those costs*. obviously a big part of whatever $XXB valuation they get is going to be pricing in scenarios where they have yuge revenue growth, but they also are going to have to solve this growing cost/DAU problem. i have absolutely no idea how feasible that part of this is/what reasonable cost paths look like on that side - would be very interested to hear opinions on this.

also curious if people have thoughts on the non voting share issue (and accompanying lack of 13d req filings), or share/control structure wrt being acquired (which could be a realistic bull case here)



*from S-1: "Cost of revenue consists primarily of payments to third-party infrastructure partners for hosting our products. Hosting costs primarily include expenses related to bandwidth, computing, and storage costs. Cost of revenue also includes revenue share payments to our content partners, content creation costs, which include personnel-related costs, and advertising measurement services. In addition, cost of revenue includes inventory costs for Spectacles and facilities and other supporting overhead costs, including depreciation and amortization."

Last edited by jvds; 02-04-2017 at 08:35 PM. Reason: formatting?
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Old 02-04-2017, 09:44 PM   #19
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Re: SnapChat IPO

Quote:
Originally Posted by ToothSayer View Post
Could someone outline a $200 billion valuation bull case? A $trillion valuation bull case?

If not, stay away.
While not a long-Snap'er, here's some well-thought-out arguments on where Snap goes from the very smart Ben Thompson.

https://stratechery.com/2015/old-fashioned-snapchat/

https://stratechery.com/2016/snapchats-ladder/
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Old 02-04-2017, 11:33 PM   #20
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Re: SnapChat IPO

Monetization is the easiest part. They have an insane amount of data to sell and can use the data to place advertisements. Valuation seems high but I am someone who doesn't really "get it" so that doesn't mean anything.

I'd be most worried about growth potential, but again, I don't get it
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Old 02-05-2017, 12:16 AM   #21
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Re: SnapChat IPO

Quote:
Originally Posted by mmbt0ne View Post
Key quote from that link imo:
That’s not to say success is guaranteed: the development of the Snapchat product has been far more impressive than the development of Snapchat as a business.

Quote:
Originally Posted by coordi View Post
Monetization is the easiest part. They have an insane amount of data to sell and can use the data to place advertisements.
no.
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Old 02-05-2017, 02:04 AM   #22
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Re: SnapChat IPO

Ah, you are right. 5 years of phone and other various data points on 13-30 year olds is worthless. What was I thinking!
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Old 02-05-2017, 04:11 AM   #23
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Re: SnapChat IPO

I think this is one of the most interesting parts of this IPO:
Quote:
Although other U.S.-based companies have publicly traded classes of non-voting stock, to our knowledge, no other company has completed an initial public offering of non-voting stock on a U.S. stock exchange. We cannot predict whether this structure and the concentrated control it affords Mr. Spiegel and Mr. Murphy will result in a lower trading price or greater fluctuations in the trading price of our Class A common stock as compared to the trading price if the Class A common stock had voting rights. Nor can we predict whether this structure will result in adverse publicity or other adverse consequences.
I would like to find some bull cases for this stock because the consensus seems to be crash and burn and it seems hard to figure out the other side.
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Old 02-05-2017, 03:30 PM   #24
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Re: SnapChat IPO

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Originally Posted by coordi View Post
Ah, you are right. 5 years of phone and other various data points on 13-30 year olds is worthless. What was I thinking!
no.
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Old 02-06-2017, 12:06 PM   #25
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Re: SnapChat IPO

Instagram massively slowed down their growth by duplicating their "story" feature. Now that Facebook is adding it also I'll be curious to see if their growth rate recovers at all
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