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Estimated losses would make Snapchat the most unprofitable social media IPO

sentieo.com

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Re: Estimated losses would make Snapchat the most unprofitable social media IPO

#41

Post by jpatokal »

imaginenore wrote: post #2

The $1.05B revenue for 2017 figure is completely made up. But even if you assume it's real, the $25B valuation still makes zero sense. 25 times the annual revenue, not the profit.

Not sure why the above is getting downvoted, since the revenue number in the article is literally made up!

...it is possible to crank out a rudimentary model given reasonable assumptions. We were surprised that no one seems to have done this yet and so cranked one out just to see what happens. ... we arrived at the $1bn revenue target for 2016

Here's the spreadsheet they used: https://sentieo.com/wp-content/uploads/snap-model-1.xlsx

Google Docs copy for your convenience: https://docs.google.com/spreadsheets/d/1HGmor-k953dlAUvMJUvg...

Basically, plug random numbers into the blue figures and watch the rest dance around.

Re: Estimated losses would make Snapchat the most unprofitable social media IPO

#42

Post by angryasian »

Analemma_ wrote: post #21

HN's algorithm has a sense of humor: this pairs nicely with the other front-page story about the 2014 prediction that Facebook would be dead by 2017.

ehh.. FB wasn't even monetizing their mobile products when they went public. There was huge growth potential there. Snap will have a much harder time. Showing ads between stories, is a tough sell. They aren't contextual and are poorly targeted ( no real known interest graph ). They could possibly determine some sort of interests from people you follow, but all they really have is location and device information. With device information you could possibly correlate PII, but even bluekai's information from device is pretty horrible. Most people don't use their real names and I know for a lot of people its similar to myspace where they just give out snapchat names to random people.

Re: Estimated losses would make Snapchat the most unprofitable social media IPO

#43

Post by yueq »

Analemma_ wrote: post #21

HN's algorithm has a sense of humor: this pairs nicely with the other front-page story about the 2014 prediction that Facebook would be dead by 2017.

it's already dead to many asian/chinese users. they moved to line and wechat.

Re: Estimated losses would make Snapchat the most unprofitable social media IPO

#44

Post by Retric »

saycheese wrote: post #36
monkmartinez wrote: post #32

Earlier quoted context omitted.

The problem is those numbers are easily faked|manipulated. I agree with OP in the same way that I believe the story about the shoe shine boy and the stock market. It may not happen tomorrow, but facebook is not cool anymore.

Just to be clear, are you saying it is easy to "fake" Facebook's numbers below, and if so, how? Revenue - 7.01B (up 59% YoY) Net Income - 1.38B (up 166% YoY)

Look into pump and dump, there are a lot of ways to make a company look better in the short term at the cost of long term net profits.

Re: Estimated losses would make Snapchat the most unprofitable social media IPO

#45

Post by rrdharan »

jensvdh wrote: post #17
danso wrote: post #5

Since Facebook's IPO, which tech unicorns still feel bullish? Here are the tech IPOs I can think off the top of my head. Maybe it's selection bias (I only remember the ones that don't look healthy), but this is what I thought of, and they all are not doing well compared to their IPO price, or were on a heavy downward trend: - Box http://finance.yahoo.com/quote/BOX?ltr=1 - Pandora http://finance.yahoo.com/quote/P - Tw…

How about Slack and Docker? Do you think they're going to IPO soon?

Docker has not, to my knowledge, actually found a working and scalable business model quite yet. Doesn't mean they won't find one, of course, but that's kind of a prerequisite for an IPO.

Slack CEO's most recent comments suggest that IPO won't happen this year at least; they are also quite savvy (not the first rodeo for the founding team/leadership and they have plenty of investment demand plus the founders are all financially secure). I'd be surprised if we see a Slack IPO even in 2018.

Re: Estimated losses would make Snapchat the most unprofitable social media IPO

#46

Post by neximo64 »

angryasian wrote: post #42
Analemma_ wrote: post #21

HN's algorithm has a sense of humor: this pairs nicely with the other front-page story about the 2014 prediction that Facebook would be dead by 2017.

ehh.. FB wasn't even monetizing their mobile products when they went public. There was huge growth potential there. Snap will have a much harder time. Showing ads between stories, is a tough sell. They aren't contextual and are poorly targeted ( no real known interest graph ). They could possibly determine some sort of interests from people you follow, but all they really have is location and device information. With…

> FB wasn't even monetizing their mobile products when they went public

Back then they were saying FB couldn't do it and there wasn't enough screen real estate on a phone to make it meaningful. Google had the previous years good but it was about to end. Their ad platform at the time was also a failure and they were bleeding money. Lots of it rhymes with Snap, there are lots of parallels.

Re: Estimated losses would make Snapchat the most unprofitable social media IPO

#47

Post by angryasian »

Xyik wrote: post #26

i find it hard to believe that it could do worse than Twitter.

sorry for repeating myself, but I think they will have a much harder time and will do worse than twitter. At least with twitter you can identify an interest graph. Snapchat is similar in a sense but monetizing stories is a tough sell, because there is no real contextual information on what your friends are actually creating stories about. I just don't see people following brands on snapchat like they do on twitter. Snaps filters I will say are effective, but just how effective we'll see.

Snapchat's entire premise is based on ephemerality so even if someone were to advertise or brand, it goes away and is done. You can rewatch stories but even that is limited. Like twitter I don't see this product crossing over to a more general use of the population like facebook. Even expansion overseas will be hard because there are already major messaging platforms that have a strong foothold. Line, whatsapp, Snow ( snapchat clone), wechat and kikao. I also can't see them really expanding beyond the US.

Re: Estimated losses would make Snapchat the most unprofitable social media IPO

#48

Post by throw2016 »

This could as easily have been titled why X will be the most profitable social media IPO ever. It reads more like someone is hoping for them to fail and is grasping for reason to justify this unpleasant emotion.

Snapchat established itself in a challenging marketplace dominated by large, successful and well funded companies. Something Google inspite of all its engineering prowess, financial resources and influence has failed repeatedly to do. They have not even come close.

Let's give the founder some credit for gaining a large and engaged userbase. Its a huge achievement in any context and given competitors are making money there is no reason think Snapchat can't.

Re: Estimated losses would make Snapchat the most unprofitable social media IPO

#49

Post by rhizome »

lowglow wrote: post #25
Analemma_ wrote: post #21

HN's algorithm has a sense of humor: this pairs nicely with the other front-page story about the 2014 prediction that Facebook would be dead by 2017.

Facebook does feel like it is dying though. 1. A lot of my friends are leaving facebook 2. A lot of my dev friends no longer build on facebook's platform 3. Most of the young kids I know have moved to Snapchat. 4. Most of the older kids I know hang out on Instagram. 5. All the friends that worked at facebook have left to go work elsewhere.

2. Is there even anything left to develop against in the FB ecosystem anymore? Besides some external thing with FB logins (OAuth), that is.

Re: Estimated losses would make Snapchat the most unprofitable social media IPO

#50

Post by angryasian »

neximo64 wrote: post #46
angryasian wrote: post #42

Earlier quoted context omitted.

ehh.. FB wasn't even monetizing their mobile products when they went public. There was huge growth potential there. Snap will have a much harder time. Showing ads between stories, is a tough sell. They aren't contextual and are poorly targeted ( no real known interest graph ). They could possibly determine some sort of interests from people you follow, but all they really have is location and device information. With…

> FB wasn't even monetizing their mobile products when they went public Back then they were saying FB couldn't do it and there wasn't enough screen real estate on a phone to make it meaningful. Google had the previous years good but it was about to end. Their ad platform at the time was also a failure and they were bleeding money. Lots of it rhymes with Snap, there are lots of parallels.

agree but layout and design can be fixed. when the core of your product is ephemerality you have a much harder problem to solve.
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