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Snap Jumps in Debut After App Maker Raises $3.4B in IPO

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Re: Snap Jumps in Debut After App Maker Raises $3.4B in IPO

#191

Post by johnrob »

unholiness wrote: post #189

Economics novice here. How did we get such a huge difference (40%!) between the IPO price and the current price, when both sides had $3.4 billion at stake on getting that price "right"? Is there some huge information disparity here? Moreover, if investors feel that $24 a share is a fair price, why weren't they swooping in before the IPO and, say, offering $20 a share for the whole chunk? Sorry if this seems like a ri…

If they priced the stock accurately, there would be a 50% chance the stock would go down on the first day. They want it to go up and thus under price it.

Re: Snap Jumps in Debut After App Maker Raises $3.4B in IPO

#192

Post by chimeracoder »

darkerside wrote: post #182
chimeracoder wrote: post #174

Earlier quoted context omitted.

The $SNAP price isn't being driven by index funds. Index funds also aren't about blindly investing ("we don't really care what...") - it's about delegating that trust. For example, SPY is delegating that to a trusted entity (you're trusting that the S&P 500 will remain a meaningful measure of the US stock market).

"Delegating to a trusted entity" isn't different from "blindly investing"/"buy at any price". jmharvey's point stands.

> "Delegating to a trusted entity" isn't different from "blindly investing"/"buy at any price".

Those are incredibly different things. If I put $5000 in SPY, even if the S&P 500 index contains $FOO today I'm not telling my brokerage firm to "buy and hold $FOO at any price", because that's not how the SPY index works, and it's also not how index fund investing works a strategy either.

In addition, most indices are based on fundamentals like market cap, earnings, and price - either directly or indirectly. Putting money in an index fund is delegating the work of that research to a trusted entity, in exchange for a fee (which is usually bundled into the trading prices).

Actual "blind investing" or "buy at any price" would be someone who trades on individual stocks without doing any systematic research, either directly or through a delegate.

Re: Snap Jumps in Debut After App Maker Raises $3.4B in IPO

#193

Post by moolcool »

jeffbax wrote: post #171
moolcool wrote: post #78

Earlier quoted context omitted.

I think this will be worse. Snapchat isn't nearly as culturally sticky as Twitter. Sites like Twitter, Instagram, and Facebook have a robust friend/follower system, and users have a huge backlog of things they contributed to the platforms. No contributions on Snapchat last more than a single day, so what is motivating users to stay on the platform instead of using Facebook or Instagram's offerings? Their friends list…

I think Snap has potential to be huge… anything that wins the race to replace TV is going to be big. Whether they can do it before FB clones them/leverages their network is a big open question. That said, despite the fact that I love Twitter more than any other network, almost none of my friends use it maybe ~a dozen people I know closely in real life still post to it. Almost all of my friends use Snapchat and compla…

Snap is the last thing that would replace TV. Nobody sits down and spends a consecutive hour on Snapchat

Re: Snap Jumps in Debut After App Maker Raises $3.4B in IPO

#194

Post by ewtasfasgs »

mi100hael wrote: post #158
Domenic_S wrote: post #120

Earlier quoted context omitted.

Posting on HN (or reddit, or...) will never die, because you get to correct people who are wrong on the internet. Snap not so much...

I don't think that's quite right. Snapchat does have a chat feature which allows you to essentially send feedback on peoples snaps/stories, so you could absolutely tell people they're wrong for making some statement.

Sure, but it's far from part of a community discussion. There is no such thing as a snapchat community, just contact lists.

Re: Snap Jumps in Debut After App Maker Raises $3.4B in IPO

#195

Post by kevando »

unholiness wrote: post #189

Economics novice here. How did we get such a huge difference (40%!) between the IPO price and the current price, when both sides had $3.4 billion at stake on getting that price "right"? Is there some huge information disparity here? Moreover, if investors feel that $24 a share is a fair price, why weren't they swooping in before the IPO and, say, offering $20 a share for the whole chunk? Sorry if this seems like a ri…

From what I understand, IPOs are very complex, but an ELI5 goes something like this: They want to open the stock to the public without crazy volatility in price, so there is a "pre-IPO" where brokers get access to buy it at $17, then $18, etc. and when people stop grabbing - they open it to the public. I think the underwriter basically buys all the stock for $17/share and then they broker it out to everyone, so anyone that buys over $17 is profit to GS. And GS assumes the risk that they priced it correctly and Snap is happy with $17/share so they're cool with GS profiting

Re: Snap Jumps in Debut After App Maker Raises $3.4B in IPO

#196

Post by ska »

hugs wrote: post #173
ChuckMcM wrote: post #99

Earlier quoted context omitted.

They had a pretty large participating contribution (50M shares as I recall) so that is a bunch of money that paid off some folks who might have been skittish. I was surprised to see as large a bounce as there was. And it has no doubt realigned the world view of a bunch of Snapchat employees[1]. To your last point I can't imagine they are going to talk earnings in a GAAP context unless they are generating lots of free…

Yup, solid advice re: waiting. Generally, I've heard it as "don't do anything drastic with the money for a year". That gives enough time to let the emotions cool down.

It's not even just the emotions. The money isn't real until it settles.

Re: Snap Jumps in Debut After App Maker Raises $3.4B in IPO

#197

Post by michaelbuckbee »

idiot_stick wrote: post #54
michaelbuckbee wrote: post #24

Earlier quoted context omitted.

The hard part with these things is that in some ways progress and growth is non-linear. So Snap has (by all accounts) done a masterful job of launching their first hardware product: https://www.spectacles.com/ How do you value that? I'm of the opinion that AR style glasses are the technology that will be the next tech wave post mobile phones (FB buying Oculus and Google pushing so much money on MagicLeap is explained…

> How do you value that? It's a pair of glasses that stream video from a camera. I'm not saying it's not cool, but what is so crazy about it that it's hard to value? > What's that worth? If you're buying IPO shares and can't answer that question yourself, you're probably doing something wrong.

To me, it's a thought experiment about where SnapChat will be a few years in the future.

Consider that they are pretty indisputably the leaders in terms of shipping real, actual working AR on mobile -> https://youtu.be/Pc2aJxnmzh0

So "how do you value" the number one AR company on the planet having shipped their first hardware device that:

- Has sidestepped all the "glasshole" baggage of Google Glass

- Genuinely nice looking non "borg" styling

- Actually works as intended

- Masterfully executed on a unique and successful marketing rollout. I completely agree on your point that it's a "pair of glasses that stream video from a camera", the important thing is that they've built a whole distribution and demand system where that is actually something people want in large numbers.

So, compared to MagicLeap, HoloLens, etc. SnapChat is working from a "worse is better" standpoint where their v1 is horrible on a feature vs feature basis against the Hololens (and presumably whatever MagicLeap is going to ship).

But, I feel pretty confident in thinking that they're selling many more units of their Spectacles (at $129) than Hololens (at $3,000) and they're learning at a much faster rate.

The question is: What will Spectacles v2-v5 look like? At what point do they not need a mobile phone? At what point can they make phone calls? At what point do they get gestural support (another area where Snapchat feels like a leader on mobile).

It's hard to look at an early click-wheel, monochrome screen iPod and see a mobile phone ecosystem worth trillions of dollars and I think it's far from certain that Spectacles are the equivalent, but I think there is a real chance that is the case.

Re: Snap Jumps in Debut After App Maker Raises $3.4B in IPO

#198

Post by econner »

ChuckMcM wrote: post #183
econner wrote: post #156

Earlier quoted context omitted.

> They had a pretty large participating contribution (50M shares as I recall) so that is a bunch of money that paid off some folks who might have been skittish. Could you explain what this means a little more? What is a participating contribution in this context? Are these shares employees were able to sell in the IPO?

The s1 listed 50m shares as coming from existing share holders but they did not break it out. Usually that is employees with vested shares and occasionally other investors. Was more common in the dot com IPO's but Zynga did that too as I recall

Ah ok, so the company makes an exception to the lockup period for IPO participation? How do they typically decide who gets to participate?

Re: Snap Jumps in Debut After App Maker Raises $3.4B in IPO

#199

Post by chimeracoder »

unholiness wrote: post #189

Economics novice here. How did we get such a huge difference (40%!) between the IPO price and the current price, when both sides had $3.4 billion at stake on getting that price "right"? Is there some huge information disparity here? Moreover, if investors feel that $24 a share is a fair price, why weren't they swooping in before the IPO and, say, offering $20 a share for the whole chunk? Sorry if this seems like a ri…

> Moreover, if investors feel that $24 a share is a fair price, why weren't they swooping in before the IPO and, say, offering $20 a share for the whole chunk?

Well, they were. When a company IPOs, it doesn't sell its stock directly on the market - it sells it to intermediary bankers, who buy it at a price that they think will lock in profit for them when they sell it at the opening bell. (In addition, the early purchasers are also other bankers and trading firms - as an individual, there's zero chance that you'll get the IPO price unless the stock flatlines when it opens).

So, from the company's perspective, the ideal situation is to price that as high as possible, and actually overshoot the market price - that way, they leave no money on the table, and they can raise as much as possible for the number of shares they're selling. In that case, the share price will drop a few minutes after the opening bell, and it'll close trading that day somewhere below the opening price.

Note that that's exactly what happened with Facebook ($FB), and the bankers were pissed off. That's why you saw so many articles about the Facebook IPO being a "failure" at the time. It wasn't a failure for Facebook - they made a ton of money! It was a failure for the bankers who wanted to make a profit on the resale, and instead sold those shares at a loss.

I'm oversimplifying, because there was a lot of other stuff that went into the Facebook IPO that complicated it[0], but that's the general idea.

[0] a lot of people learned the meaning of the "reverse greenshoe" that day!

Re: Snap Jumps in Debut After App Maker Raises $3.4B in IPO

#200

Post by MegaButts »

Erik816 wrote: post #188
ashark wrote: post #141

Earlier quoted context omitted.

Welcome to the future. The economy's mostly driven by incredibly invasive advertising, normalized spyware, and kids sending each other naked pics. It's far worse than any 80s film ever imagined.

The "economy" is much, much larger than a few social networking apps.

I think the truth is somewhere in the middle. Don't forget Google makes its money from advertising. And as more people grow up expecting to have everything for free, more people will bawk at paying for ownership of anything. It's why so many people will sustain countless invasive advertisements to play a mobile game over weeks/months/years instead of just paying a 1 time fee of a few dollars.

Advertising has transformed our economy over the past century, and especially this past decade.

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