Snap Jumps in Debut After App Maker Raises $3.4B in IPO • Hacker News Board

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

#321

Post by econner » Fri, Mar 03, 2017, 4:58 AM UTC

snapemployee wrote: post #311

kapkapkap wrote: post #267

Can someone comment as to what kind of payday this IPO translates to for say the 30th engineer hired by Snap? (I realize that this is impossible to answer accurately, and that there is still a 4 month lockup)

check out this leaked email: wikileaks-DOT-org/sony/emails/emailid/139607 Looks like engineers were offered 10k-35k shares at a $9.90 strike price in Jan of 2014. So $250k - $875k. Not bad, but also not millionaire status. Also ISO's will be taxed heavily.

Snap did a 1 to 10 stock split in July 2014 (https://www.forbes.com/sites/parmyolson/2014/08/08/snapchat-...).

That means, today, those grants are at least 100k - 350k shares at a $0.99 strike price (assuming no other splits). Or $2,300,000 to $8,050,000.

Unless I'm missing something?

Edit: Ah the numbers above are actually too low. If you look that email also lists the percentages. 10,000 shares at that time was 0.022% which at the current valuation is actually $5,280,000 less some likely dilution.

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

#322

Post by fullshark » Fri, Mar 03, 2017, 5:05 AM UTC

xuki wrote: post #318

fullshark wrote: post #259

Earlier quoted context omitted.

I saw pretty easily how Instagram could be worth a billion to FB, who has a social network and wants to expand their user base / stop competition from rising. I don't understand how these shares that pay no dividend and give no voting power are worth $24 each. They are basically "SnapChat Fun Bucks." Anyone buying it just hoping another person down the line will pay more for it. On top of that, we know there's a larg…

Short it if you truly believe the stock will go down. Easy money ;).

I'm humble (and risk averse) enough to admit I could be wrong. But it baffles me.

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

#323

Post by vecter » Fri, Mar 03, 2017, 5:17 AM UTC

Apocryphon wrote: post #155

zachgersh wrote: post #58

My favorite tweet about the whole situation: https://twitter.com/objective_neo/status/736530568222015489

Maybe the future is in these over-glorified social media lifestyle companies acquiring or bailing out "worthy" startups working on "hard problems". Sort of like how ad-funded Google is investing in health longevity research and the like. The future is going to be funded from the largesse of dumb app companies, because the public would rather fund dumb app companies than rocket ship firms.

That or because it's more profitable to do so, especially on a risk-adjusted basis? What's with the negativity around funding apps if they create tangible value? What makes them "dumb"?

If you believe there's some amazing untapped opportunity in funding rocket ship companies, then perhaps you should raise some money from LPs and invest in rocket ship companies.

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

#324

Post by prostoalex » Fri, Mar 03, 2017, 5:19 AM UTC

pm90 wrote: post #85

chollida1 wrote: post #13

I'm happy for the NYSE that this went well. SNAP has done some pretty large volume so far with no problems. Interestingly enough, well atleast to someone who cares about the cash equity markets, the NYSE actually did a test run last week to try and simulate the chaos that occurs during any hot IPO. So now we know that there is atleast some appetite for shares with no controlling interest and no indication of paying o…

> So now we know that there is atleast some appetite for shares with no controlling interest and no indication of paying out a dividend any time soon. A current market cap of 30 Billion is a pretty darn big accomplishment! This is really disturbing. I don't know if its an indicator of too much money in the market, or just the fact that the market itself has expanded so much. Why would investors be OK with losing powe…

A single share of stock has historically bundled a few things:

1) A right to a pro-rata dividend

2) A right to vote on board, current executives, and strategic matters

3) A right to a pro-rata share of proceeds in case of a liquidity event, be it acquisition or a bankruptcy sale

It seems that current Snap shares come with (3) and only (3), so my guess would be that those investors are betting on growth and nothing but growth.

Price difference between GOOG and GOOGL provides some empirical insight into the value of a voting vs non-voting share.

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

#325

Post by [deleted] » Fri, Mar 03, 2017, 5:20 AM UTC

missing8 wrote: post #72

InternetUser wrote: post #49

Earlier quoted context omitted.

> my job and lifestyle have caused me to detach from a significant chunk of society Yeah, the 13-21-year-old chunk of society. Do you, as a Linux Kernel Developer, happen to be within that demographic? Even their IPO roadshow video (which I see has now been removed) talks about their "13-34-year-old" user base, and then emphasizes the far higher levels of engagement and far higher potential among the lower half of th…

Sure the bulk of their users are young, but several of the people I follow are betweeen 28 and 45. It's not like Snapchat is an esoteric thing. Using it can be a function of how outgoing and expressive you are. Or if you have some purpose. The same reason you post on Hacker News is why people post on Snapchat -- to interact with others.

[deleted]

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

#326

Post by vecter » Fri, Mar 03, 2017, 5:21 AM UTC

dvt wrote: post #268

kapkapkap wrote: post #267

Can someone comment as to what kind of payday this IPO translates to for say the 30th engineer hired by Snap? (I realize that this is impossible to answer accurately, and that there is still a 4 month lockup)

Interviewed with Snapchat about 3-4 years ago (sub-100 employees). Did not get an offer, but their interview process was pretty standard and professional. They were giving out 0.001% equity at the time. I'd say it would come out to 250k-500k, but it's very hard to extrapolate. They were already a mega hit with like 10 employees so I doubt anyone that hasn't been there super early (like first 5 employees) will become…

Given they were giving out 0.02-0.07% in 2014, it seems you're off by at least an order of magnitude if not more: https://wikileaks.org/sony/emails/emailid/139607.

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

#327

Post by vecter » Fri, Mar 03, 2017, 5:23 AM UTC

khazhou wrote: post #281

dvt wrote: post #279

Earlier quoted context omitted.

First, equity isn't compensation, it's ownership. Second, it's about risk. Third, it's about luck. So, if you get paid a market salary and benefits, you can't really expect to own much of the company that's providing you with that salary and benefits as it's essentially burning money on you. If you came in and said "can I get 1% ownership if I take 15k a year with no benefits" that would be a different story, but tha…

If you go in to a startup and say "I'll take 15K a year w/no benefits" you'll get a flat-out NO. That big exit-event equity is not for engineers. It's for founders.

That depends entirely on the stage of the company. If you're one of the first few employees, that would make complete sense.

If the last priced round made that 1% worth $20M on paper, then that's unreasonable.

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

#328

Post by prostoalex » Fri, Mar 03, 2017, 5:28 AM UTC

bduerst wrote: post #126

trjordan wrote: post #97

Earlier quoted context omitted.

For the same reason 50% of the US didn't vote in the last election. Or employees don't demand to view board decks. Most investors are buying as a way to make money off of continued success. They don't want to control the business or make decisions, and even if they did, they don't want to invest enough to make a dent in the normal 1-share-1-vote sort of model. They're looking the company and hooking their accounts to…

Why not just invest in corporate bonds then? At least then you're safer from bankruptcies.

Well, that's where the institutional smart money is, buying up and depressing yields on high quality corporate debt.

Bond market pricing also benefits large investors. A small guy buying 20-30 bonds will pay higher markup, higher commission and be quoted higher price than a large player with an 8-digit buy order.

In a stock market (outside the dark pools) two players will get quoted roughly the same market price. The larger guy is likely to be at a disadvantage, as exposing a large buy order might lead to supply tightening.

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

#329

Post by vecter » Fri, Mar 03, 2017, 5:28 AM UTC

asher_ wrote: post #320

johnrob wrote: post #191

Earlier quoted context omitted.

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.

Can someone explain this to me? If I own something, I want to sell it for as much as the market will bear. I don't want to sell it and have someone flip it for a huge margin almost immediately. How is a large first-day bump not considered a failure for an IPO? What is it about the situation that reverses a common sense understanding?

Perception and uncertainty.

Humans are irrational emotional beings. Somethings feels hot because it popped on its first day trading from $18 to $24. Humans don't know the counterfactual, which is that the stock could have been initially priced at $30 and then dropped to $24. Both result in the exact same value of the company, but the first is definitely perceived as better.

Also, it's hard to say what the "true" value of a stock or company is. In practice, it's what people are willing to pay for some shares of it, and we then as an industry standard take that last traded price, multiply it by the number of extant shares, and then come to a "market capitalization" value.

So therefore, people depend on signals such as whether a stock goes up or down to determine whether or not it's hot, since people don't know what a "true" price for the stock really is anyway.

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

#330

Post by prostoalex » Fri, Mar 03, 2017, 5:32 AM UTC

ianstormtaylor wrote: post #100

pm90 wrote: post #85

Earlier quoted context omitted.

> So now we know that there is atleast some appetite for shares with no controlling interest and no indication of paying out a dividend any time soon. A current market cap of 30 Billion is a pretty darn big accomplishment! This is really disturbing. I don't know if its an indicator of too much money in the market, or just the fact that the market itself has expanded so much. Why would investors be OK with losing powe…

(Disclaimer: I know nothing.) One of the things that I personally believe is that when a company IPOs their priorities become heavily skewed towards profit and earnings, often over a short term period, above all else. And I think that hurts them. I'm not sure that removing the voting rights of stockholders completely eliminates that pressure—it's probably also rooted in having to be on earnings calls, and the price f…

> remove those voting rights might help to eliminate some of the negative, short-term-profit-seeking pressure

For every long-term success story (FB) there's also a story where investors gave the founder super-voting rights and got pretty much nothing in return (ZNGA).