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Snapchat Seeks to Raise as Much as $4B in IPO

bloomberg.com

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Re: Snapchat Seeks to Raise as Much as $4B in IPO

#11

Post by lvs »

cblock811 wrote: post #3

I have yet to speak with anyone who thinks Snapchat's valuation is realistic and that their business model will sustain them. When I see this I just think of Twitter all over again. I would love to hear arguments supporting Snapchat though.

> I would love to hear arguments

I wouldn't. Face it, this class of SV "startups" are the new pump-and-dump investment vehicles. They burned $3B in funding to build a chat app, and Prince Bin Talal needs to cash out with 10X return at some point.

Re: Snapchat Seeks to Raise as Much as $4B in IPO

#12

Post by cstejerean »

adamnemecek wrote: post #6
serg_chernata wrote: post #2

When a company like Uber is raising insane amounts of money I think to myself - "ok, they're working on vehicle automation and other ambitious projects, it makes sense". When a company like snapchat is looking for 4B in addition to existing funding I am left completely dumbfounded. Can someone please explain why they would need this much cash?

They have captured an important segment of the market (12-2x years olds). I also think that people In this age group find it a ton more engaging than the alternatives.

Sure, but what precisely are they planning to spend $4B on?

Re: Snapchat Seeks to Raise as Much as $4B in IPO

#13

Post by giarc »

adamnemecek wrote: post #5
cblock811 wrote: post #3

I have yet to speak with anyone who thinks Snapchat's valuation is realistic and that their business model will sustain them. When I see this I just think of Twitter all over again. I would love to hear arguments supporting Snapchat though.

I think that part of the reason twitter is doing the way it's doing is the less than stellar user engagement. AFAIK snapchat is killing it on that front. Idk if that justifies the valuation but I do see the general public a lot more pumped about it than I've ever seen people pumped about Twitter (ymmv).

From what I've heard, if you are 13-25 with a smartphone, there's a good chance your primary source of communication is snapchat. And unlike other platforms (WeChat, WhatsApp), snapchat has a content delivery mechanism. So not only do friends connect with friends, but they also connect with businesses, celebrities etc.

Twitter was never about fast communication between two people, no one every said "Let's see if Mike wants to join us for dinner, I'll just Twitter DM him". Whereas WeChat, Viber, Whatsapp allows you to communicate quickly, there's no connection to advertisers (from what I know). Therefore snapchat is valued so highly because it does what twitter and Whatsapp et al couldn't do.

Re: Snapchat Seeks to Raise as Much as $4B in IPO

#14

Post by bcherny »

serg_chernata wrote: post #2

When a company like Uber is raising insane amounts of money I think to myself - "ok, they're working on vehicle automation and other ambitious projects, it makes sense". When a company like snapchat is looking for 4B in addition to existing funding I am left completely dumbfounded. Can someone please explain why they would need this much cash?

Hopefully someone can chime in with actual numbers, but (1) engineers/designers/product, (2) marketing, (3) servers/infrastructure.

Re: Snapchat Seeks to Raise as Much as $4B in IPO

#15

Post by cstejerean »

TeMPOraL wrote: post #9
ethanbond wrote: post #7

Earlier quoted context omitted.

User engagement doesn't pay the bills.

With enough ads, it does. (And you can also try and leverage it to get VCs to pay your bills.)

With enough ads user engagement also goes down. If Snapchat pushes it too far it will drive users off the platform and onto the next "cool" thing.

Re: Snapchat Seeks to Raise as Much as $4B in IPO

#16

Post by giarc »

ethanbond wrote: post #7
adamnemecek wrote: post #5

Earlier quoted context omitted.

I think that part of the reason twitter is doing the way it's doing is the less than stellar user engagement. AFAIK snapchat is killing it on that front. Idk if that justifies the valuation but I do see the general public a lot more pumped about it than I've ever seen people pumped about Twitter (ymmv).

User engagement doesn't pay the bills.

Have you used snapchat? Swipe left from the main screen and I'm shown 4-5 advertisements right away. User engagement + advertisements = bills paid.

Re: Snapchat Seeks to Raise as Much as $4B in IPO

#17

Post by TAForObvReasons »

cstejerean wrote: post #12
adamnemecek wrote: post #6

Earlier quoted context omitted.

They have captured an important segment of the market (12-2x years olds). I also think that people In this age group find it a ton more engaging than the alternatives.

Sure, but what precisely are they planning to spend $4B on?

Building a war chest to purchase the next company or act quickly. You need to have the cash on hand, and that can't happen overnight. They need not spend the money today.

Re: Snapchat Seeks to Raise as Much as $4B in IPO

#18

Post by wmeredith »

serg_chernata wrote: post #2

When a company like Uber is raising insane amounts of money I think to myself - "ok, they're working on vehicle automation and other ambitious projects, it makes sense". When a company like snapchat is looking for 4B in addition to existing funding I am left completely dumbfounded. Can someone please explain why they would need this much cash?

Someone has to be the next Twitter.

Re: Snapchat Seeks to Raise as Much as $4B in IPO

#19

Post by onewaystreet »

serg_chernata wrote: post #2

When a company like Uber is raising insane amounts of money I think to myself - "ok, they're working on vehicle automation and other ambitious projects, it makes sense". When a company like snapchat is looking for 4B in addition to existing funding I am left completely dumbfounded. Can someone please explain why they would need this much cash?

It's better to raise more than you need when you are in a position of strength.

Re: Snapchat Seeks to Raise as Much as $4B in IPO

#20

Post by DenverR »

serg_chernata wrote: post #2

When a company like Uber is raising insane amounts of money I think to myself - "ok, they're working on vehicle automation and other ambitious projects, it makes sense". When a company like snapchat is looking for 4B in addition to existing funding I am left completely dumbfounded. Can someone please explain why they would need this much cash?

It's less about raising funds and more about liquidity for current shareholders
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