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Snap falls to IPO price

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Re: Snap falls to IPO price

#231

Post by mrweasel »

Rjevski wrote: post #155

I can't understand what are they doing to not make any profits. They are selling ads. Server resources to exchange the pictures are a minor cost, so where is all that ad money going to? If they stopped wasting money on development time making their UX even worse, or stupid stuff like Spectacles, or this: https://www.recode.net/2017/6/17/15824222/snapchat-ferris-wh... - maybe they would actually be making profits righ…

>They are selling ads.

They do? Where does those ads show up? I've never seen ads on Snapchat, I get the feeling that most people aren't.

Re: Snap falls to IPO price

#232

Post by philh »

Simon_says wrote: post #229
simonh wrote: post #227

Earlier quoted context omitted.

Except it doesn't do that. In an open auction if someone bids higher you know you won't get any shares unless you raise your bid. In a Dutch auction if you keep your bid low there's always a chance you will get your shares and at a good price. As actually happened in the Google case. Yes you're risking you might not get any shares, but bidding higher risks unnecessarily pushing the price higher for yourself and every…

Are you sure you know what a Dutch auction is? In your descriptions, you seem to be transposing open and Dutch auctions.

Note that the term "Dutch auction" is overloaded, but in this case the article specifies:

> Often called a "Dutch" auction, this type of sale allows any investor—institution or individual—to put in a bid over the Web for a certain number of shares at a certain price without knowing what others are offering to pay. After the bidding, the highest price at which every available share can be sold becomes the price for all the shares—the IPO price. Google, along with early backers, was selling almost 20 million shares, and bids could be submitted for as few as five.

This doesn't actually remove the incentive to underbid. You might be thinking of a Vickrey auction? That's an auction of one item, in which the high bidder pays the second-highest bid. (This is what I always think of when I hear "dutch auction".) There's an obvious generalization to auctioning multiple items; but the Google auction is not that generalization, and also that generalization apparently doesn't work.

See https://en.wikipedia.org/wiki/Dutch_auction and https://en.wikipedia.org/wiki/Vickrey_auction . Frustratingly, the Dutch auction page describes a "second-price auction" which is different from that described on the "second-price auction" page that it links to, which redirects to Vickrey auction. It's a whole mess.

Re: Snap falls to IPO price

#233

Post by thanatropism »

Simon_says wrote: post #229
simonh wrote: post #227

Earlier quoted context omitted.

Except it doesn't do that. In an open auction if someone bids higher you know you won't get any shares unless you raise your bid. In a Dutch auction if you keep your bid low there's always a chance you will get your shares and at a good price. As actually happened in the Google case. Yes you're risking you might not get any shares, but bidding higher risks unnecessarily pushing the price higher for yourself and every…

Are you sure you know what a Dutch auction is? In your descriptions, you seem to be transposing open and Dutch auctions.

Dutch / English auctions are respectively descending- and ascending-price auctions.

In an English auction the auctioneer starts at a lowball (possibly zero) price and gets increasingly higher bids until he's satisfied that the price can't go any higher. In a Dutch auction the auctioneer starts from a highball price and lowers it himself gradually until he gets a buyer.

A second, orthogonal issue is if an auction is if it's first price (as most auctions: best bidder pays best bid), second price (best bidder pays second best bid) or something more complicated. Economists love the idea of second price ("Vickrey") auctions, but I personally haven't seen it used.

I recommend Bob Milgrom's article "A primer on auctions". It's in the Journal of Economic Perspectives sometime in 88 or 89 I think.

Actually, there's very much a lot to recommend in the Journal of Economic Perspectives whenever you want to learn about something in economics. This journal focuses on publishing accessible surveys of research areas that are just beginning to solidify (and already have a "shape" to them), rather than publish new ideas. It has excellent curatorship and articles tend to be written by top experts in each field.

Re: Snap falls to IPO price

#234

Post by gdilla »

daveFNbuck wrote: post #211
gdilla wrote: post #207

Earlier quoted context omitted.

Ya, you're not getting it. First, a transcript of your communication is not desirable to many (if you find this puzzling, it's because you're old :P). Second, FB Messenger or any chat client you have to manage the groups (forget it).

How are Snapchat's group messages different? I thought it only did one-on-one.

because it's not? Snapchat stories dude - that is the real conversation.

Re: Snap falls to IPO price

#235

Post by _pmf_ »

dntrkv wrote: post #92
skinnymuch wrote: post #74

Earlier quoted context omitted.

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…

Google Plus was a very real competitor when they launched (right around the time of Facebook's IPO), it was a very similar situation to that of Snapchat vs Instagram. Huge user growth very quickly, but most of it due to it being attached to Gmail. Not saying Instagram won't remain a real competitor to Snapchat, but it's possible that over time users will go back to their previous habits. Personally, I never post anyt…

> Google Plus was a very real competitor when they launched (right around the time of Facebook's IPO)

Has Google Plus at any point ever had as much as 2 percent of FB's active users? If not, what metric do you use to consider it a "very real competitor" at some point in time?

Re: Snap falls to IPO price

#236

Post by skewart »

kinsho wrote: post #209
skewart wrote: post #208

Earlier quoted context omitted.

Thanks! That's nice to hear. From what I can see, there are three reasons why they are in a worse position to create a new, successful product than any other startup or big company. 1. They are already pretty big and successful. It's extremely hard for companies to really shift focus unless they're truly desperate. Opportunities that are great in the long term usually seem painfully small, or impossibly distant, in t…

Regarding your third point....are you sure about that? I feel that many people do want to share the interesting moments (more or less) of their life online. If this wasn't true, Instagram wouldn't be such a popular platform and a threat to Snapchat. That being said, I'm bearish on Snapchat, at least in the short term. I don't see much opportunity for growth, not unless it manages to capture the hearts and minds of th…

Oh for sure, people want to share stuff. It's just a matter of how much, how often, and with whom.

Maybe I wasn't clear. From what I can tell Snap is focused on connecting people in the moment. It's more about giving people a way to share the little adventures of their day with close friends than it is about giving people a way to share a few big events in their week, or giving people a way to broadcast their lives to a mass audience of strangers (they have this functionality but de-emphasize the use case). Facebook and Instagram are more about sharing fewer but bigger moments - though they work okay for sharing more and smaller if that's what you want - they're one of the many good enough options.

I agree with your point about the next wave of teens. And I suspect that will be tricky. That said, maybe if it never catches on with the olds it'll be easier to stay popular? Maybe they can just own the teen chatting niche?

Re: Snap falls to IPO price

#237

Post by Aissen »

sbov wrote: post #139
dntrkv wrote: post #92

Earlier quoted context omitted.

Google Plus was a very real competitor when they launched (right around the time of Facebook's IPO), it was a very similar situation to that of Snapchat vs Instagram. Huge user growth very quickly, but most of it due to it being attached to Gmail. Not saying Instagram won't remain a real competitor to Snapchat, but it's possible that over time users will go back to their previous habits. Personally, I never post anyt…

Google Plus was a last ditch effort by a company to get, and keep, any kind of foothold in a market that they continually failed at. It was to my knowledge, at the very least, their fourth attempt (Orkut, open social, Google Buzz, Google Plus... am I missing one?). Calling it a "very real competitor" seems a bit overstated.

> am I missing one?

Google Reader and YouTube both predate G+, and were specialized social networks. One for links of any kind (you could share anything), and the other for videos.

Re: Snap falls to IPO price

#238

Post by sah2ed »

kgwgk wrote: post #204
chimeracoder wrote: post #114

Earlier quoted context omitted.

> They are quite literally setting the prices of IPO's though, by fiat, and not via an auction or some other market-oriented mechanism. Er, no, it's literally set by an auction (the auction occurring between the different banks who can underwrite the IPO). A bank that is consistently able to predict the IPO opening-bell price better than the others, or is willing to accept a slightly smaller cut than the others, will…

> the auction occurring between the different banks who can underwrite the IPO What do you mean? Do you have a reference?

I wouldn't characterize the activities between banks underwriting an IPO as an auction, probably closer to a negotiation [0].

This [1] is a well-written prose from Matt Levine on the role of underwriters in working with Snap prior to their IPO.

[0] https://www.bloomberg.com/view/articles/2016-01-15/uber-is-r...

[1] https://www.bloomberg.com/view/articles/2017-03-27/banks-tha...

Re: Snap falls to IPO price

#239

Post by kgwgk »

sah2ed wrote: post #238
kgwgk wrote: post #204

Earlier quoted context omitted.

> the auction occurring between the different banks who can underwrite the IPO What do you mean? Do you have a reference?

I wouldn't characterize the activities between banks underwriting an IPO as an auction , probably closer to a negotiation [0]. This [1] is a well-written prose from Matt Levine on the role of underwriters in working with Snap prior to their IPO. [0] https://www.bloomberg.com/view/articles/2016-01-15/uber-is-r... [1] https://www.bloomberg.com/view/articles/2017-03-27/banks-tha...

How is that related to the claim of the IPO price being set by an "auction occurring between the different banks who can underwrite the IPO"?

Edit: thanks for the clarification

Re: Snap falls to IPO price

#240

Post by sah2ed »

kgwgk wrote: post #239
sah2ed wrote: post #238

Earlier quoted context omitted.

I wouldn't characterize the activities between banks underwriting an IPO as an auction , probably closer to a negotiation [0]. This [1] is a well-written prose from Matt Levine on the role of underwriters in working with Snap prior to their IPO. [0] https://www.bloomberg.com/view/articles/2016-01-15/uber-is-r... [1] https://www.bloomberg.com/view/articles/2017-03-27/banks-tha...

How is that related to the claim of the IPO price being set by an "auction occurring between the different banks who can underwrite the IPO"? Edit: thanks for the clarification

I've edited my comment above to be more clear.
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