Jump to content

SNAP - SnapChat


SmallCap
 Share

Recommended Posts

I have nothing of great significance to add at this point but I will give this somewhat irrelevant comparison:

 

SpaceX, $12B valuation: Launches $70m rockets into space and lands them safely on a boat at sea

 

Snapchat, $20b valuation: rainbow filters.

 

Don't take it too seriously, just something to think about.

Link to comment
Share on other sites

I have nothing of great significance to add at this point but I will give this somewhat irrelevant comparison:

 

SpaceX, $12B valuation: Launches $70m rockets into space and lands them safely on a boat at sea

 

Snapchat, $20b valuation: rainbow filters.

 

Don't take it too seriously, just something to think about.

 

And they're both unprofitable.

Link to comment
Share on other sites

On Wednesday SNAP was worth ~24b.  Today it is 34b.  Snapchat lost 500m last year. 

 

Its a fun little app but I do not see it ever becoming worth that amount or maybe even profitable.  A majority of its users have very little income and I dont see anyone over 35 becoming a user.  My parents stare at pictures of  their grandchildren or other folks' children on FB for hours, the same picture.  Snapchat would give them 3-10 seconds.  Its a fun app but not a money maker.

Link to comment
Share on other sites

Tech IPO's often seem loopy.  I remember the GoPro founder getting special permission to sell huge blocks of stock "for his foundation" before his lockup was up - now there was a signal if the financial statement / market cap mismatch wasn't enough..

 

Berkshire payed $32.4 Billion to buy 100% of the equity of the Burlington Northern Santa Fe Railroad - a company that has sent cash dividends to the parent company of $10 Billion over the last three calendar years, and $22.5 Billion in cash distributions to BRK since the acquisition closed in Feb. 2010.  (not sure how much, if any, of that cash was in connection with Berkshire's consolidated income tax return)

 

Different strokes for different folks

 

On Wednesday SNAP was worth ~24b.  Today it is 34b.  Snapchat lost 500m last year. 

 

Its a fun little app but I do not see it ever becoming worth that amount or maybe even profitable.  A majority of its users have very little income and I dont see anyone over 35 becoming a user.  My parents stare at pictures of  their grandchildren or other folks' children on FB for hours, the same picture.  Snapchat would give them 3-10 seconds.  Its a fun app but not a money maker.

Link to comment
Share on other sites

If they make it work, it will be the next Facebook.

If they don't, it will be the next Twitter.

 

I don't have the expertise to make that call but if I were a gambling man I would bet on the latter.

 

It won't be the next Facebook, at least not without significant changes. Where it is right now is more like Instagram. Monetizing mobile users in an app is a different game than Facebook is playing, so to be anything like Facebook they would need to migrate their entire user base + future growth to also using Snapchat on PC.

Link to comment
Share on other sites

It's my understanding SNAP is trying to position itself as a hardware company for cameras with spectacles and plans for a camera drone. One might be able to string together a justification of their valuation as a social media platform selling ad revenue, it'd be a stretch but maybe. As a hardware company it's a lot more difficult. On one hand you have to allow access to the platform through a variety of hardware, most of which isn't proprietary, to keep users engaged, on the other you want users to buy you hardware in order to make money.

 

In its prospectus filed last month, Snap called itself “a camera company,” shifting its emphasis — at least in rhetoric — fully to hardware.

 

http://nymag.com/selectall/2017/03/snapchat-ipo-snapchat-spectacles-and-the-future-of-snap.html

 

As the only 27 year old I know without SnapChat, I'm probably missing something here, although thank's to Instagram's shameless ripoff of SnapChat recently it doesn't appear to be much.

Link to comment
Share on other sites

I think its likely overvalued as well, but we shouldn't be too quick to dismiss simply because of the young user base. According to a teacher friend of mine, Snapchat is THE way teens communicate. Sure they also have Facebook, but they spend all their time on Snapchat. Those eyeballs aren't worth much today, but they will be as these teens get older.

 

As another aside, I (33yrs old) am more interested in using Snapchat today than I was in the past. The face filters can be addictive, and I would not be surprised to see them expand their reach of daily users as they add more things to do.

 

Will they be able to monetize all this effectively? Thats the $34B question.

Link to comment
Share on other sites

I'll pass. It's a 10 seconds decision  ;)

 

10 seconds?  I did it in 1.

 

Nice shot. You're even faster than me.  ;D

 

Yes, no one can do nothing faster than I.

 

Like boosting your ego?  :P

 

Also, not sure your wife would happy about that  ;D

Link to comment
Share on other sites

I'll pass. It's a 10 seconds decision  ;)

 

10 seconds?  I did it in 1.

 

Nice shot. You're even faster than me.  ;D

 

Yes, no one can do nothing faster than I.

 

Like boosting your ego?  :P

 

Also, not sure your wife would happy about that  ;D

 

We all need a super power.  Doing nothing fast and having an enormous ego is mine.

 

She isn't.

 

Link to comment
Share on other sites

I think its likely overvalued as well, but we shouldn't be too quick to dismiss simply because of the young user base. According to a teacher friend of mine, Snapchat is THE way teens communicate. Sure they also have Facebook, but they spend all their time on Snapchat. Those eyeballs aren't worth much today, but they will be as these teens get older.

 

As another aside, I (33yrs old) am more interested in using Snapchat today than I was in the past. The face filters can be addictive, and I would not be surprised to see them expand their reach of daily users as they add more things to do.

 

Will they be able to monetize all this effectively? Thats the $34B question.

 

I think the $34B questions are will the teens who are using it now still be using it in 5 years, hell in 2 years or even 1 year?  And will younger kids who will be teens 3-10 years from now use it?  Taste change as the next new thing comes along.  Teens don't want to use the same things their parents or even older siblings use.  Marketing to teens is a fickle business.

 

FB doesn't have the teens, but it gets people when they are older and keeps them.

 

Link to comment
Share on other sites

 

I think the $34B questions are will the teens who are using it now still be using it in 5 years, hell in 2 years or even 1 year?  And will younger kids who will be teens 3-10 years from now use it?  Taste change as the next new thing comes along.  Teens don't want to use the same things their parents or even older siblings use.  Marketing to teens is a fickle business.

 

FB doesn't have the teens, but it gets people when they are older and keeps them.

 

The user-base question yes, but more so a monetization question. From Chaos Monkeys, FB didn't figure out their monetization model until after their IPO, but when it did, it paid off handsomely. Twitter still hasn't figured out it out.

 

I'm a core user of SNAP and I don't think they've figured it out either. They're making money from brand marketing and advertising but their data isn't as valuable.

 

[*]I don't see how they expect to further monetize when I can skip video ads. I think the core product of short videos also makes it hard to slot in a lot of advertising

[*]I also don't see how the advertisers make their ROI back on the platform

[*] Brands are giving away content, which disincentives users to actually go to their properties

[*] FB is on the offensive with Instagram and Messenger copying features, and its been working (at least among my friends)

 

 

Link to comment
Share on other sites

It's been pretty well covered that Facebook's feature-cloning seems to have decimated Snap's growth.

 

Back when Facebook faceplanted trying to clone Snapchat (2013?), Snapchat was primarily a messaging app, and a large part of its value was precisely that it was not-facebook (psuedonymized, facade of privacy and ephemerality, etc.) But Snapchat has been evolving into more of a broadcasting than messaging app (yes, big-time simplification). Facebook wins a broadcasting war, since audience size becomes the chief consideration for platform choice.

 

Super qualitative, but I get the distinct sense that the Snapchat user of 2017 is relatively more concerned with audience size, and the Snapchat user of 2014 was relatively more concerned with audience make-up. I think that bodes poorly for the platform long-term.

Link to comment
Share on other sites

Options will start trading on March 10th.  Haven't heard if there will be single stock futures, which was the only way I was able to short GoPro (least costly) after the IPO run up.  Only 14% of the company's float went public and a lot of that is still finding it's home, so the stock is very hard to borrow for the time being.  Might always be expensive to borrow if shorting it is popular.

 

Oh - and don't do it.  Don't short SNAP.

 

Any ideas on how to short this? My broker has a BULL X3 SNAP warrant, but that's it...

Link to comment
Share on other sites

Options will start trading on March 10th.  Haven't heard if there will be single stock futures, which was the only way I was able to short GoPro (least costly) after the IPO run up.  Only 14% of the company's float went public and a lot of that is still finding it's home, so the stock is very hard to borrow for the time being.  Might always be expensive to borrow if shorting it is popular.

 

Oh - and don't do it.  Don't short SNAP.

 

Any ideas on how to short this? My broker has a BULL X3 SNAP warrant, but that's it...

I tried to short it, but couldn't find shares :(

 

Link to comment
Share on other sites

SpaceX, $12B valuation: Launches $70m rockets into space and lands them safely on a boat at sea

 

Snapchat, $20b valuation: rainbow filters.

 

 

Yeah, but one has much higher capital requirements than the other.  With a gun to my head and forced to choose one to invest in, I'd go with SNAP.

Luckily, I can pass on both.  :)

 

Link to comment
Share on other sites

  • 4 months later...

Options will start trading on March 10th.  Haven't heard if there will be single stock futures, which was the only way I was able to short GoPro (least costly) after the IPO run up.  Only 14% of the company's float went public and a lot of that is still finding it's home, so the stock is very hard to borrow for the time being.  Might always be expensive to borrow if shorting it is popular.

 

Oh - and don't do it.  Don't short SNAP.

 

Any ideas on how to short this? My broker has a BULL X3 SNAP warrant, but that's it...

I tried to short it, but couldn't find shares :(

I ended up shorting this using mini futures from Vontobel.

Link to comment
Share on other sites

I bought a bunch of otm puts here. The lockup expires July 29, and the huge decline leading up to it has to make insiders nervous.

 

If I was a 30 year old engineer who was theoretically still worth millions with a 100% allocation to SNAP stock, I'd be aggressively selling on the 29th...

Link to comment
Share on other sites

I bought a bunch of otm puts here. The lockup expires July 29, and the huge decline leading up to it has to make insiders nervous.

 

If I was a 30 year old engineer who was theoretically still worth millions with a 100% allocation to SNAP stock, I'd be aggressively selling on the 29th...

 

I actually did the same.  I got the idea from: http://adventuresincapitalism.com/post/2017/07/09/SNAPageddon.aspx

 

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...