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Snap falls to IPO price

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Re: Snap falls to IPO price

#71
post #8

What does $SNAP need to do to deliver on the hype? Is there anything that can make $SNAP a good investment for anyone other than the parties involved in trading the IPO? I tend to be bearish on $SNAP in general, but I'm interested in the discussion. How do they right the ship and boost back up to that $25-30 range? What's their play?

Given the product and strategic path they're on the only thing they can do to create value is restart user growth. Their business model depends on them becoming a powerful brand advertising platform (brand advertising is when companies want to spread general awareness of their brands and influence the public's overall impressions of what a company stands for, even if it is far removed from any actual moment of purchase; TV has traditionally been the dominant brand advertising platform, but as cable TV is beginning its decline into irrelevance the top spot is up for grabs). They're not into collecting super detailed info on users, so advertising can't be too targeted, and they're not pushing a shopping angle either.

And in order to become a compelling brand advertising platform they need massive reach (i.e. at least a billion users).

How can they restart user growth? Well, that's probably going to be pretty hard at this point. I suspect they'll need to broaden their appeal from their initial teens/college/just-out-of-college user base to an older and more diverse crowd (just like Facebook and Instagram did). That will probably require some UI redesign to make things a bit more intuitive to navigate, and perhaps other feature changes that make it a more attractive destination.

However, I think it's basically all but impossible for them to restart the growth engine at this point. A lot of people have heard of Snapchat, tried it, and decided they don't like or just don't see the point when they already use Instagram.

Making matters worse is the fact that their initial market is incredibly hard to hold on to. Things almost never stay super popular across multiple "generations" of high school and college kids (except for default utilities that everyone at every age uses). In other words, it's unlikely that Snapchat will be popular with high school and college kids in five years.

So, I suspect that as their metrics stagnate and decline over the next few years they will increasingly focus on a series of moonshot new product ideas (like Specs) and hope that something sticks. But there's little reason to suspect that they'll be any better at building a random new product than any other start-up or big company out there (and, in fact, I'd argue there are some good reasons to think they'll be worse).

As is probably pretty obvious, I'm quite bearish on Snap these days. I was extremely bullish a year and a half ago, but they've just been so slow to execute when it mattered. They lost their wave of growth. At this point, I'd be surprised if they can catch another.

Re: Snap falls to IPO price

#72
post #17
post #5

Pardon my language but: no fucking shit. $20bil was unbelievably overpriced. This is the one major tech stock that I simply do not get . ~$125 a user is insane.

Facebook is >$200 per user.

Facebook has been profitable each fiscal year they've been public. Their first full year public they produced $1.5 billion in net income.

Facebook is tracking to a ~31 PE ratio for fiscal 2017, with a growth rate that is still high.

$14 billion in net income (fiscal 2017 speculative), is a lot more important as a metric than $200 per user. If they push that net income up to $30 billion over the next four or five years (very plausible), at 24 times earnings (at that point, speculating on a $720b market cap), maybe their per user climbs to $300+ - it still won't matter, the net income is what will matter.

Snapchat doesn't possess any of the positive financial qualities that Facebook had, to square against the high per user value.

Re: Snap falls to IPO price

#73
i wonder if the community realizes how bad those kind of overhyped companies makes us look to the general audience, with founders cashing out shortly after the stock gets public and everybody realizes valuation were simply absurd.

i don't think we'll have to wait for a long time before we see traditional investment funds and banks not willing to take part in that game anymore.

Re: Snap falls to IPO price

#74

As skeptical as I am that Snap will ever be a moneymaker, this data point is not meaningful in any way. Facebook traded below (often _well_ below) its IPO price for the first 15 months on the market.

Fb also bought IG at their IPO time and WhatsApp 2 years later. Both combined should be worth over $100B today. Compared to the roughly $20B spent. Obviously FB is still worth over $300B if we hypothetically chop $100B off. Far above IPO still. Just saying that FB had multiple things go very well for them to go from merely profitable at IPO to being the giant it is now -- mainly mobile exploding, but other things too.

This doesn't matter too much, but it also feels like Snapchat has more competition in a way too while growing. Besides other social networks and FB copying them, Snow is gaining ground in Asia right now. FB primarily had regional competitors limited to one main country (like VK or Orkut in Brazil). I could be wrong about this though.

Re: Snap falls to IPO price

#75
post #17

Earlier quoted context omitted.

Facebook is >$200 per user.

Facebook grew so much, almost everyone has it and its use cases are versatile (and therefore the data collected). Snapchat is really just used by younger folks with almost no financial power for chatting in the weirdest way.

Anecdotal: I, and a large chunk of my friends and acquaintances use snapchat regularly. We're 30 year olds making good money. In the same way that some messages are best suited for a text message, some for an email, and some for a phone call, there are some messages where snapchat is the best medium.

Re: Snap falls to IPO price

#76
post #54

Earlier quoted context omitted.

So this is pretty lazy anti-intellectualism. Can you provide some evidence that the investment banks are colluding on IPO pricing?

The facts that they are the primary beneficaries of underpriced IPOs (ie, the biggest reward for the smallest risk) and that they are the all-powerful gatekeepers of the process and that most of these IPOs shoot up in price on day one (meaning that their customers are leaving huge amounts of money on the table) is a pretty good indication. If you don't count fully aligned incentives as evidence, it's at least very cl…

> The facts that they are the primary beneficaries of underpriced IPOs (ie, the biggest reward for the smallest risk) and that they are the all-powerful gatekeepers of the process and that most of these IPOs shoot up in price on day one (meaning that their customers are leaving huge amounts of money on the table) is a pretty good indication

On the other hand, the entity that they are taking money from is literally the company that's IPOing (when the price shoots up, it's called leaving money on the table, because it's money that the company isn't raising in their IPO, and is instead going to the banks).

There's a reasonable degree of competition between banks to underwrite an IPO, and companies have the ability to choose which bank to work with, so any conspiracy here would require actual widespread collusion between underwriters (which would be illegal the same way horizontal integration generally is in any industry). While not impossible, that's the sort of claim which warrants tangible evidence, rather than indirect evidence just from the existence of shareholder prices increasing on the opening bell.

Re: Snap falls to IPO price

#77
post #34

Earlier quoted context omitted.

Thanks for the info, I think my next bank account is going to be with Charles Schwab ( I was waffling between Ally and Charles Schwab, but this is a useful feature for me and a good step up from Robinhood).

I wasn't aware of it but Robinhood did offer SNAP IPO: https://support.robinhood.com/hc/en-us/articles/115000902306...

Yes, but it's filled at regular price (I bought SNAP at $24), it's just that you put in the trade previous day (in the case of SNAP). It's more of a convenience feature, you won't get the stock at the pre-IPO value ($17 in SNAP's case).

Re: Snap falls to IPO price

#78
post #48
post #28

Earlier quoted context omitted.

> It was oversubscribed tho, so I got half the quantity I wanted and sold shortly after opening. This seems like a pretty good reason to auction the shares in order to maximize the amount of money the company takes in. That they very rarely do has always seemed kind of dirty to me.

Google tried to be cheeky and go the auction way. It was wrought with problems. As far as I can tell, all tech IPOs following that went back the traditional way.

> problems

How can I learn more about this?

Re: Snap falls to IPO price

#79
post #10

$17.00 was the IPO price but only for investors with access. Your average investor with an eTrade account saw a price of $24.00+ when the market opened that morning, and it hit almost $27.00 that day. So those folks have seen a 30%+ drop since IPO. Given that Snap paid out billions in IPO bonuses to executives and other employees, it's turned out to be a pretty big wealth transfer from retail investors to Snap employ…

They sold at 17$ (ipo prices) not higher. So right now, both sides are equal.

Re: Snap falls to IPO price

#80
post #10

$17.00 was the IPO price but only for investors with access. Your average investor with an eTrade account saw a price of $24.00+ when the market opened that morning, and it hit almost $27.00 that day. So those folks have seen a 30%+ drop since IPO. Given that Snap paid out billions in IPO bonuses to executives and other employees, it's turned out to be a pretty big wealth transfer from retail investors to Snap employ…

Snap employees can't actually sell any stock until 6 months after IPO.
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