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Snap Inc. Trading 41pct Up, Valuing the Company at $33.6 Billion

     
5:19 pm on Mar 2, 2017 (gmt 0)

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Snap Inc's IPO, originally valued at approximately $25 billion, when opening today rose 41% valuing the company at $33.6 billion. It seems investors were eager to invest in Snapchat.
Snap Inc. Trading 41pct Up, Valuing the Company at $33.6 Billion [investors.com]

Snap Inc, Snapchat, Files for IPO With Valuation of $25 billion [webmasterworld.com]
11:02 am on Mar 3, 2017 (gmt 0)

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I think a lot of people are going to loose money.
2:28 pm on Mar 3, 2017 (gmt 0)

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In user terms, each snap chat user is currently valued at $480
2:35 pm on Mar 3, 2017 (gmt 0)

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I can't get my head around the size of the valuation, but what do I know? It will probably be the next Twitter (in terms of share price) though.
2:37 pm on Mar 3, 2017 (gmt 0)

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>> @keyplyr: I think a lot of people are going to loose money.

Regular people - yes.

Regular people already lost money when bankers sold them worthless paper.

But snapchat is a great way for special "alphabet" agencies to store videos of people. So there's that going for them. As long as .gov takes trillions per year of our taxes and give a good chunk to alphabet agencies, they won't stop and companies like snapchat will "make" billions as the "surveilance" product.

Same as Facebook, as a surveilance platform it is unmatched.
2:39 pm on Mar 3, 2017 (gmt 0)

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That's an interesting way to look at it, thanks. More users and that figure drops per user. Plus, of course, it really depends on how it best monetizes.
2:48 pm on Mar 3, 2017 (gmt 0)

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engine, you can suggest any other way to monetize , I am sorry, "dumb videos" at billions, other than as mass surveillance?

I understand that big companies such as Verizon and GE aren't that bright at checking what ads work as they've got millions to spend on branding anyway, so they'll take any place where there's lots of people. But seriously, any other ideas?
3:22 pm on Mar 3, 2017 (gmt 0)

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I can't, smilie, but, then, the audience value must be there to an extent. It could end up being another twitter, or it could end up being another FB. I doubt the latter.
3:41 pm on Mar 3, 2017 (gmt 0)

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@engine
More users and that figure drops per user.

More interesting questions are:
What is the life span of a user?
What is the cost to acquire a new users?
How do they expect to earn revenue from each users?

Assume that they are able to fully monetize the user base today (not actually the case). Assume an ROI of 25%. That would mean that they expect to earn $600 of revenue per user per year. Maybe I am looking at this wrong but that seems extreme. At a 1$ per ad click, ( I wish I had an average CPC of a 1$), that would amount to on average about two ad clicks per user per day every day forever.

Note about ROI, 25% seems low given the extreme risk of such an investment.

The great part about the company now being public is that all the above questions can be answered and are of public record.
6:14 pm on Mar 3, 2017 (gmt 0)

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I think this IPO constitutes a Dot Com 2.0 bubble top.

The bubble is about to pop.

And look at the banker friends pumping this one. B.loomberg has two stocks next to each other , Snapchat at $26 and Amazon at $850. Except the pump-n-dumpers forgot to mention that snapchat has 0 profit and no profitable business model. And Amazon is one of the few banker-owned entities who survived Dot Com 1.0 crash (due to very deep banker pockets, veeeeery deep, losing billions per year, but who's counting now).

The only other second idea I have if they came up with a way to stronger brainwash kids than what TV commercial do. Not the snapchat programmers, people behind it. so if they do.... and it's 14-20 market that you can brainwash into liking your brands for the rest of their life... maybe that's a market.
6:40 pm on Mar 3, 2017 (gmt 0)

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Kids gathering streaks and fires... don't get the valuation thing.
6:54 pm on Mar 3, 2017 (gmt 0)

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Bloomberg has two stocks next to each other , Snapchat at $26 and Amazon at $850.

The price of a stock alone is meaningless, as a company can have 10 shares at 2.6M/share just as a company can have 10M shares at $2.6 per share. You can compare the value of two companies by comparing the their market capitalization (share price x number of shares). But even that is not perfect because it may not account for factors such as debt and fixed capital. Another accepted comparison metric is P/E = share price / earnings. Which is the amount you pay today for to receive those earnings. But obviously this falls apart for a company like Snap inc. that has no earnings. So that is why there is all this speculation.

I think the play on Snap is really the brainwash angle you mention. Investors are paying a big premium in the hopes of capturing the minds of the 14-20 demographic.

How do you value what that is worth?
6:06 pm on Mar 4, 2017 (gmt 0)

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The "forgetfulness cycle" seems about right.

1980-ish = real estate market bust, followed by a boom where people go nuts outbidding one another in 2004-5, heading into a crash in 2006.

1999-2001 = dot come bubble bursts, when all the chatter was about "eyes, visits" etc and no one offered a sound economic, experience based answer the question "Yeah, but how, exactly, will the site make $$$ equal to the stock valuation?"

15 years later the question remains . . but now the rationale for valuation is "It's not really about the profitability of the service . . it's . . it's . . It's about the data! The user data! No, it's about first mover advantage! No . . No . . It's about disrupting the . . the . . No, it's about them being an acquisition target . . like Twitter . . which for sure someone's going to pay handsomely for . . because . . " (I'd let Twitter run out of gas / runway, entirely, before making a bid for their assets . . but who knows . . )

Yeah, like there's a shortage of that . . data . . and people have lots of disposable income . . and the stock market is never going to go down . . down . . down . . to 2006 levels.

To paraphrase Pogo: "We have met stupid and he is us."
9:10 pm on Mar 6, 2017 (gmt 0)

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>> @NickMNS I think the play on Snap is really the brainwash angle you mention. Investors are paying a big premium in the hopes of capturing the minds of the 14-20 demographic. How do you value what that is worth?


Here's the thing though. If the angle was working , why would the real owners (not the kids shown to everyone) would dump such a valuable asset? There's no reason to.

But it is losing half a billion per year.

I bet they are dumping a loser that's leaking money big time, while they can.

You know, so that your and my retirement plan financial management would buy it. It is a lot easier to pump-n-dump via mutual funds etc. if you give them certain incentives and let them make a cool million or two here and there on IPOs and brag about the winners.
9:38 pm on Mar 6, 2017 (gmt 0)

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Oh, I did not check the charts today.

Snapchat fell below it's pre IPO price. Went to $29 and is now below $24.

It is a CLASSIC pump-and-dump.

Why these are not investigated and people are not jailed, is beyond me. Probably as money crosses into $B territory , those who generate them become untouchable?
2:35 am on Mar 7, 2017 (gmt 0)

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why would the real owners (not the kids shown to everyone) would dump such a valuable asset?

To raise capital so that they can hire more staff buy infrastructure and to pay back investors (at some point the VC's want thier money back).
They did not dump the asset. They sold off a portion of it. How much? Exactly is unclear, because I have better thing to do that read SEC fillings but according to a recode article the two founders still hold 88% of the voting rights.
[recode.net...]

Snapchat fell below it's pre IPO price. Went to $29 and is now below $24.

The IPO was priced at 17$, $24 is the price at the open of public trading. In other words the invest banks and their close friends made off like bandits with the $7 difference.
2:20 pm on Mar 20, 2017 (gmt 0)

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It's trading below $20, at $19 and change. And falling sharply.

>> In other words the invest banks and their close friends made off like bandits with the $7 difference.

Exactly.
8:24 pm on May 10, 2017 (gmt 0)

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Snapchat news.

They just lost 20% of their imaginable "market cap" because they just reported $2.2 Billion loss in Q1 2017.

You don't have a real market cap when you don't have any profits. Just like lots of unicorns, you are vaporware that evaporates.