- whistleblower lawsuit in the works by former employee who claims they seriously inflated user metrics
- a shitload of shares about to become free trading, with a declining share price, you've got to think alot of employees are going to go stampeding to the exits rather than holding
- record short interest by the street
- one of the main IPO banks (JP Morgan) just cut their target from $20 to $18 for the stock,
- The same bank doesn't have an almost guaranteed BUY rating on the stock, and has rated it as a HOLD/Neutral, which is the equivalent of a sell in sell side analyst parlance
- a miss on their first earnings
- their biggest rival, Instagram, is doing well in competing with them, and they have Facebook's large pile of money and audience behind them
- and the macro climate of people expecting a market cooling coming soon, in those cases people tend to flock away from speculative companies to the old fashioned kind that make money.
SNAP might be a long term good company, but its going to be a rocky ride in the short term.
I really liked Snapchat. It was new and fun, and innovative when it first came out. But they've really failed to fight against FB coming into their market with Instagram.
> a shitload of shares about to become free trading, with a declining share price, you've got to think alot of employees are going to go stampeding to the exits rather than holding
> record short interest by the street
This is double counting the same thing. The reason there's short interest is because there's a bunch of employees that would like to sell now but cannot. I suspect that much of these short positions will close out when the lock-up ends and employees sell into the market.
I wouldn't be surprised if there weren't back-channel deals along the lines of "you short it now and close when my lockup period ends, and I'll use my locked-up long position to unofficially hedge for you".
Unofficial(as in, one entity hedging for a separate entity) hedging is 1) illegal and 2) very inefficient and prone to screw you at tax time.
But realistically... you know non-wealthy stockholders(ie employees) want to cash in, so you buy into the retail sell-off on lockup day, bid it up 3 points, then close when you see the other retail buyers chasing the rally. Closing several thousand long shares should be sufficient to run their stops, depress the price, and present you with another buying opportunity at or near your original entry price.
All that said.. guessing what will happen with the market is how you lose your money, and fail at day trading before you ever got started.
If, say, a person owns $5MM of snapchat stock and their spouse knows this, can their spouse (acting rationally) not simply short or buy a put option for some portion of this?
They didn't agree to anything in the RSU agreement and no long as the spouse wasn't acting on insider information and simply wanted to hedge, I'm not certain a crime would have been committed, unless the person owning the shares actually asked their spouse to perform this action.
On paper: yes, that sounds good. BUT, if the SEC comes knocking...they operate in a way that looks like "guilty until proven innocent", and having your spouse do it appears at first glance as guilty. The RSU agreement would be important to see though, they may have some bits about spouses and immediate family - or they may not(in which case what you described is 100% above board).
If anyone holding RSU's is (legally) able to show the RSU agreement, it would be insightful to read.
That just makes the most obvious classes of "your actions cause a short position" not an option. Like, if you tell your cousin that you plan on giving him a certain number of shares when your lockup period expires, and he decides he likes the current price better and shorts it in advance, what sort of lock-up contract would prevent that? The cousin isn't an employee or their spouse so isn't restricted from shorting now, the promise to gift stock is extraordinarily unlikely to be prohibited (or even discoverable), and the gift itself is above-board.
No, and I don't think I claimed it did? Mostly just that back-channel shorting would be extraordinarily tempting while subject to a lock-up. That, and you can't really keep employees from saying that they plan on selling stock when their lock-up expires, and you can't keep the lock-up period under wraps, so the market will try to estimate the size of the impending sell-off and get in front of it with short positions.
> "you short it now and close when my lockup period ends, and I'll use my locked-up long position to unofficially hedge for you"
That is illegal and most certainly not happening. Those shares aren't even available to short in fact. Yes, naked shorting does take place and shouldn't but that's nothing to do with this.
2017 is half over. Facebook is going to make about $14bn net income in 2017. At a PE of 10 that's $140bn.
The S&P has an average PE of 15.6. That brings us to $218bn.
It's mindboggling any of you can think FB would drop back to IPO valuation at this size. Maybe in 40 years when the world has changed dramatically and most of us are retired or dead.
Snap hedged their existence on the Spectacles/hardware (https://www.spectacles.com) to the point of rebranding themselves as a "camera" company in the SEC filing.
Has anyone seen/heard about the Spectacles used since the initial hype?
While I haven't read the SEC filing myself, isn't the idea of them being a camera company more of a software play than a hardware one? Even with Spectables, that's how I took it: most of Snapchat is things-that-people-thing-other-cameras-should-do-but-can't, and that's what makes them a camera company without making and selling lots of cameras. I'm not sure though.
Yes, believing in Snap is believing they have the AR market. If you watch the latest Facebook conference and their AR announcement, Zuckerburg attacks this directly by calling the Camera the next "platform" as if we are installing apps directly onto the Camera. [0]
Facebook is clearly the follower here, there are a number of awkward jokes and it's clear Facebook doesn't "get" AR or the Snapchat userbase. Snap is the first (primarily US) company to actually get users to use AR and QR codes (in the form of Snapcodes), not to mention the first social network to do it.
Spectacles are the first camera that helps you experience video from the perspective of the person taking it. This is actually a long time coming, for anyone who watches Snapchat with the headphones in (think every kid 27 and younger because they are always listening to music), Snapchat is a very immersive experience -- today's mics are very sensitive and the realism of Snapchat makes you feel like you are there. Spectacles just take that to the next level, they will already be ready as immersive video glasses become popular.
I'm way long on Snap philosophically but do not hold a position. I'm also in the AR space and I see Snap in the lead.
I got a pair to play with it. They are very fun and silly. When I go out everyone at the bar wants to goof around with them. I think to use them you need to enjoy Snapchat for what it is.
A silly fun stress free way to share what you are up to to exactly who you want to share it with.
The roll out for spectacles was horrible. Where the heck do I get one? If I can't find them while living in Downtown SF, I don't know how they expect Spectacles to get any traction.
> If I can't find them while living in Downtown SF
That's the beauty of their roll out. Keeping it out of the hand of SF techies during launch helped create a cool brand for these in a mainstream audience. Google Glass' association w geeks helped cement their failure in the broader market.
Facebook is playing pretty vicously - adding stories to three of its apps, when realistically the only app that is similar to snapchat is Instagram - but I'm happy for it either way.
Facebook apps do some stupid shit, like in Messenger, why the fuck does the back button take me into a camera looking at my ugly mug? Why does swiping down from the top to get to the top of my messages list sometimes again open a camera to my double chins? What in the shit is going on with the stupid circles smack-dab in the middle of my conversation history? And why on earth can't I swap the camera around mid-video in an instagram vid?
But it's nothing, nothing compared to the crime against humanity that is the Snapchat UX. It is an abomination, and a buggy one at that. I've heard it's at least more responsive on iPhone, fine. I've even heard arguments that it's esoteric on purpose - you have to be young and "with it" to "get it." Friends have to ask eachother "omg how did you do that filter" or whatever, which allows a moment of millenial smugness. Fine, that can be a reason, and we can lump it in amongst the thousands of other UX charges we should levy against Snapchat.
It's a post-hoc rationalization that I am still not happy with. (even moreso 2 years later with more apps like Facebook/Skype copying Snapchat verbatim)
Instagram is not a "serious" photo app. It's strictly for fun. if you want to shoot serious pictures, you use a purpose built app, or heck, even the built-in app on your phone. Making the UI a hide-and-seek game, or at least abandoning traditional UI design for something that puts form over function makes sense in that context.
There's an actual game on Steam called "Please, don't touch anything" where this kind of random discovery is the whole point.
Not sure I'd prejudicially dismiss it as "millennial smugness" though.
> There's an actual game on Steam called "Please, don't touch anything"
The original was a web game way back in the day called "Don't shoot the puppy". When I realised what was going on I nearly died laughing. My flat mates thought I was having a seizure.
Instagram is not just a camera app anymore. It’s strong point is distribution and discovery. There is a huge pro photography community on there. They all shoot with serious DSLR/Mirrorless setups, edit shots in Adobe Lightroom and then post the resulting photos on Instagram for their following to see and engage with. Do not dismiss the pro use case for Instagram because it is massive.
Yup, this is exactly what I do, though as a hobbyist. My instagram "feed" has very few pictures not taken on a DSLR and edited in lightroom. My stories, on the other hand...
That sounds suspiciously like the addiction specialists got bored with the real games they were tweaking, and decided to move on the the UI instead, and gamify that. "Hmm, my friends are all using this weird effect, I wonder how they are doing that? I guess I'll have to spend some time and figure it out so I'm one of the elite users too..."
Mix one part neglect and abuse with one part intense pleasure from finally getting what you were looking for. Enjoy your Stockholm Syndrome cocktail, rinse and repeat.
Once you know the Snap UI it works very well. Kind of like a DSLR camera, it takes forever to learn all those buttons and functions and become habitual with them, but once you know how to find all the functions and operate the camera properly it's apparent that everything has been beautifully placed and carefully thought about. An easy to learn UI isn't necessarily the most efficient or versatile to use.
Old people wonder 'WTF is this Snapchat?', they download the app, dick around with it for a few minutes and dismiss it as incomprehensible. It's a feature, not a bug.
No, digital cameras map an incredible amount of functionality onto a limited amount of user interface (there's only so many buttons you can physically put on a camera). Snapchat takes an incredibly simple single function of taking a picture and sending it to a friend and renders it horribly complicated for no good reason.
The idea, I believe, is building camaraderie among your users as they teach each other how to use it.
IMO, Snapchat should be the easiest to decentralize and federate b/c the ephemeral nature allows expectations to be set for simple hosting like Digital Ocean. Who cares if data gets deleted?
Powerful for what exactly? Posting stupid selfies with a dog filter on top? Comparing Snapchat UX to the minimalist efficiency of a command line is weirdly triggering to me.
A CLI is the right way to interact with a keyboard in front of you at your desk.
I think the Snap interactions are at least freshly thought out for mobile. Vertical video because that's how you routinely hold a phone. Swiping from the edges of the screen as a primary interaction, etc
Powerful for doing all the things one does on Snapchat? The point is it's a UX for power users (limited discoverability, but faster than a traditional button/modal based UI once you know it). I think it's a fair comparison.
It's a badly built selfie app, there's literally nothing powerful about it.
When I say badly built I refer to how slow it runs, how much battery it consumes (hint, a lot), the fact that until recently when Google literally forced them to do it properly, the app took pictures by saving a screenshot of the viewfinder.
15 yo here. The UI is obtuse, sure, but it is very nice when you get used to it. The learning curve is a valid argument, but I'm hesitant to say there should be change.
It's a selfie app. There is absolutely zero reason for there to be a learning curve. It shouldn't be hard for a company with almost 2000 employees to develop an actually functioning and accessible UX.
I agree completely, Snapchat is a horrendously designed app, especially when compared to an extremely intuitive one like Instagram. It's a miracle youngsters are fine with the learning curve since kids are getting less patient when it comes to learning nowadays. I guess the stories and filters were worth the trouble? Who knows.
In general, I think that Snap is one of the luckiest unicorns out there. Also, the fact that they have yet to come up with a new product -- other than those silly glasses -- does not help their case much.
When you get a snap, after watching it, you can click "reply." That opens a camera. You have to tap to the left of "reply" to actually open a chat. I find that to be unexpected behavior, given especially that I make the mistake literally every time.
How do you get to "settings?" I just opened the app. I see the snapchat logo in the top left, a... search bar? For searching what? Who knows. There's what's probably the flash icon, probably a switch camera icon. Then there's a messages bubble, and a... bubble with three dots... Also there's a bubble right underneath the biggest bubble (camera take picture button I assume) with what looks like... a picture? God knows what that does. I click it. It's memories. Great, not sure why i'd need to see that but fine.
Back, messages bubble. Messages, cool.
Back, three dot bubble. Stories. Riiiight. Still no settings. "My story" has a settings icon but that's something else.
Back, ghost button. Holy shit a settings icon. Got it!
16 yo. I had to ask around friends how they did whatever they did and the learning process was kinda fun and sparked conversation. That might have helped spread the word of Snapchat.
Making Snapchat easy to use by parents would be a disaster for them, people are not engaging with content and posting to Facebook because their grandmother uses it and would see it.
I think that a lot of the weird design choices in Snapchat are intentional and very well thought out.
30 something yo here (but with the spirit of a 15yo)
I have no problem at all with Snapchat's UI and can't understand why "old" people complain about it so much. did I know how to do everything at first? no, but it was easy, just swipe left/right/up/down and tap a few places. just because it doesn't follow the conventional ui/ux paradigm doesn't make it confusing or hard, just different (and these days, not that different, since a lot of other apps are copying snap's gestures)
the issue I do have with snapchat is that I'd like to see more interesting snaps and people to follow (who are not my friends) and the app doesn't help me with that. I'm basically limited to a few people who don't snap that much and I hardly use the chat function.
I think this is where instagram one ups snapchat (the fact that ig's main content isn't ephemeral kinda helps).
I'm waiting to see what Snap comes up with (they have to come up with something, otherwise they'll be doomed).
26 yo here. I can't figure out, nor do I enjoy Snapchat's UI, but then again there's a whole generation below me that does, so who cares what I or people like me think?
Correct. Their UX is a barrier to entry to older folks to keep the user base young (<25).
Anecdotal evidence: I know numerous people over 25 who have installed snapchat once and even twice (at an attempt to use it again) only to uninstall it after being unable to figure out how to use it. But the recent college grads and younger all get it.
The UX is ridiculous but there're only so many 'operations' you can do on phones before you discover everything it does—swipe up/down/left/right, tap, double tap, long press, pinch, drag etc, so eventually you get all the gestures. Plus, Snapchat only has 3-4 'pages' (Activity in Android), so there is not much to discover.
I think the UX barrier is a post-hoc generalization. Of all places, people on HN would agree that we tolerate (and often even embrace) much worse UXs if we are sold on the functionality. The git CLI is a mess, but it's far too powerful and functional a VCS to just ignore, for example.
Sure, if the UX were nice, everyone would want to try Snapchat on their own, but there's a good chance you are not on the app because your friend group is not active on it, OR you don't care as much about the stuff they post on it. After all, it's social app.
on a same note: why does instagram hate on non-mobile UI?
on desktop the constant ping to install an ios app, but you're on x86 man. that constant prompt of the camera button when I'm on a x86. it may have worked when mobile was your roots, but you have to grow beyond mobile-only to at least allow other views.
granted somebody like Benedict Evans would say x86 is dead, but why kill the views, its cheap to produce ?
I actually enjoy the snapchat UX, I'm not sure why exactly, but its the only app I actually enjoy using... I just realized all the other apps I use are facebook, so maybe i just dont like the way they do it.
Even more brutal, hey added stories to all four of their cornerstone mobile apps, right? There's:
- Instagram Stories
- WhatsApp Status
- Facebook Stories
- Messenger [My] Day.
Though anecdotally for myself and asking some people, it seems IG Stories is used more than all others combined (plus FB released the stats that it is more popular than Snapchat). After a huge drop off, it's either WhatsApp Statuses or Facebook Stories depending on who you are. I don't know if anyone uses Messenger Day.
I love the snapchat UX, and to me, the app is incredibly fast, much faster then Instagram and Facebook. That's why I still use it instead of Instagram. That's on android though.
"Snapchat is popular among people under 30 who enjoy applying
bunny faces and vomiting rainbows onto their selfies, but many
on Wall Street are critical of its high valuation, slowing user
growth and lack of profitability. Snap has warned it may never
become profitable."
They "warned" in an SEC filing that is supposed to state possible investor risks. The way this was reported is the problem and not Snap's statement, which any investor should understand is factually correct.
Snap is a volatile play: there's a high chance, maybe bigger than 50%, that it never becomes profitable, as they warn, and there's some small chance it becomes extremely profitable. The real question is, what's the net present expected value?
Seems like kind of a prime time to increase your holding if you bought shares on the IPO and have any faith in the vision of the company. Having such an intense fight against such a dominating company could kill Snap, or it could be the disadvantage they need to be successful in the long term.
How often is it that the now-huge tech (or any industry) firms DON'T go through trying times when they first appeared on the markets?
-Apple kicked Steve Jobs out of the company convinced the monolithic giant IBM was going to cut them out of the equation.
-Amazon almost went bankrupt when the market crashed
-Facebook dropped for almost a year when it wasn't obvious how they were going to monetize their mobile platform profitably
-Nike got hit with a customs battle brought on by Converse for millions
Obviously it remains to be seen whether they will show the resilience the aforementioned companies did but the fact that some are already speaking of Snap in the past tense is kind of crazy, they've had ONE quarterly report come out since the IPO.
Lol, as did Twitter, as did Diapers.com, as did a thousand others
this isn't me saying "Now's the time everybody! Pour your entire retirement fund into SNAP before it's too late!" it's an admonishment for the short-sellers sucking in the inevitable negative media headlines around any hot IPO as fact.
So because Snap has a higher market cap means there's no excuse for the messy financials? Show me all the money Amazon was making when it was worth $20B.
> Show me all the money Amazon was making when it was worth $20B
The last time Amazon was worth less than $20 billion was back in March of 2007 [1]. The month prior, they announced results for FYE 2016 [2]. That year, Amazon had net sales of $10.7 billion on which they made a profit of $190 million (page 47). Amazon's operations, meanwhile, produced over $700 million of cash from operations (page 46).
Snap shows $150 million of Q1 2017 revenues. They managed to turn that into a $2.2 billion loss [3]. Next to that, the $150 million of cash their operations lost looks like chump change. (Snap incurred a $2 billion one-time non-cash expense in Q1, so the revenue and cash-from-operations numbers are better for comparison purposes.)
Keep in mind, too, that $1 in March 2007 bought as much as $1.19 bought in March earlier this year [4].
You are suffering from survivorship bias here. Most companies don't make it through such trying times, but those you cite succeeded against the odds to become these seemingly unstoppable behemoths.
It is true that all these high-growth companies go through major adversity on their way to the top, but this is where most end up failing. Just like every other high-growth company, Snap's valuation is predicated on atypical future results.
Even without adversity they have a tough road ahead. I would posit that there's a good chance the executive team & investors saw the writing on the wall and took the company public to get out before it totally collapsed.
It was a pretty strong signal that Evan & Bobby are primarily money-driven when they took $10M each off the table during the B round. Other notable companies where founders have done this sort of thing have resulted in fast spike-and-collapse results: Foursquare, Zynga, and Groupon.
Zuck didn't take an early multi-million dollar cash-out. The Instagram founders didn't either -- they were living in 1-bedroom apartments a year after the acquisition. Founders who believe in the long-term success of a company don't tend to get rich off a company that has not yet attained either their vision or produce significant wealth for itself. Obviously causation != correlation, but this is a pretty strong signal about the motivations of the founding team.
It's certainly their prerogative to cash out early. I'm not making a moral judgement here. However, as a value investor this is a useful signal for high-growth tech companies. This all sounds incredibly cliche, but I just don't see signals that lead me to believe Evan & Bobby have motivations in the same category as Bezos or Zuck or Jobs. All the signals are that they appear to be looking to get rich to live a life of luxury, not build their life around their company. As a human, I personally would prefer the former. As an investor and employee, I want to put my money and time into companies lead by the later.
[Disclosure: Former Instagram & Facebook employee. I don't currently own any Facebook shares]
This is the analysis I make based on what someone with a lot more experience in the markets told me a few days ago, related to $SNAP.
- Apple was a company that sold computers. SJ being kicked was an relevant event for the company, but it still sold computers and was worth something.
- Amazon was an intermediary between sellers and buyers. Today is a company that invested a lot in other things and is worth something.
- Facebook could be monetizing something, but it's still just a webpage. Remains to be seen if it's worth something, so their shares are crap (this is from a fundamental point of view, regardless of whether they keep rising)
- Nike sells shoes. It's worth something, though it's not a fundamental company for the market.
SNAP, on the other hand, has some face recognition algorithms, and created a free app. That's it. It produces nothing. It's a worthless company when it comes down to the assets it has and the product it sells.
SNAP might be a terrible investment at this point (I tend to think so because I don't think they can overcome challenge from Facebook) but based only on your points above, we'd have to conclude Google is "worthless" as well no?
Selling something vs nothing is a good metric to think about, but "advertising" is certainly not nothing. In fact, it's a multi-billion $ industry. It just so happens to be dominated by Google and FB currently, who are both "fundamentally" selling something real.
I'm not entirely sure what you're getting it because it seems like your making a pretty strong correlation between companies that provide physical goods as necessities and thus are worth more than those that provide digital goods that you could argue aren't. I'd argue that's increasingly not going to be true.
I think one could've argued at the time that Apple wasn't worth something because they were the struggling vertically integrated supplier of consumer based computers in a sea of horizontally integrated providers. It wasn't until they got more of a foothold everybody started seeing the benefits of software made to run on a single type of device.
Intermediaries have increasingly become devalued over time as digitization has meant there's less and less of a need for middle-men. Hence why Amazon's surge has come on the heels of providing Entertainment and Cloud services, something intermediaries in their space never did before.
Facebook yeah I suppose, the fact that they have margins almost no other company could dream of kind of rationalizes it to a strong degree though. All in all, I see where you're coming from.
Nike yes I see where you're coming from.
Disclaimer me posting that comment wasn't suppose to be a riot act that Snap's going to be the next $400+ billion dollar company, I'm as skeptical as most about the future prospects. However, I'd argue against saying they produce nothing. The fact that they are anti to the leading social media provider (of sorts) gives them a production point. As demonstrated in their reports, their user's incessant check in's on the app despite any Facebook-esque notification stream to keep them coming back is pretty envious (in my opinion).
You clearly have failed to see the absolutely mindbogglingly behemoth Facebook has become behind the scenes. The amount of personalized data they have surpasses even Google's at this point. I fear for those that don't take Facebook seriously, and not just in the financial sense either. Data is devastatingly powerful, and with power comes the potential for both great good and great evil.
This is an incredibly flawed argument and comes from an incredibly flawed perspective on “worth”. The most valuable thing Facebook has is distribution and that is absolutely worth A LOT. Not only that, but it has unprecedented global distribution backed by engagement numbers that keep the value afloat. You’re trying to impose the values of a physical goods economy onto one that is purely digital and the concepts don’t translate.
Whoever that "someone" is, probably isn't as experienced in the markets as you think.
I know for a fact he has over 25 years experience in the markets.
The concepts don't translate, that's for sure. However, to claim that Facebook is worth something if they just keep collecting data and we see nothing being done with that, is just wishful thinking.
Amazon invests in research and built a PaaS/SaaS service that's worth a lot. It innovates on several products like Kindle and Echo. Owns patents that are worth something.
What's the ACTUAL commercial value that Facebook is bringing to the world and to people that's making it so worthwhile? Sharing pics? Getting customized newsfeeds? Having yet another channel to communicate with your aunt or with that customer service? What do we lose if Facebook goes away tomorrow?
The actual commercial value is what I stated: unprecedented global distribution driven by content (some of which is user-generated and some of which is partner-generated).
It's the model that has worked for TV, Radio, and Newspapers but in the new world the integration points are different from those old models making the chain of value much different.
Yes AirBnB is a glorified hotel reservation site, but isn't a car just a glorified horse and buggy? I guess I just don't understand how you could be so dismissive in the face of something so clearly valuable and so clearly wanted by the market.
Isn't that pretty normal in the months post IPO while everybody gets past the initial excitement while the business starts working on long term plans with all the money?
One need only look at Facebook which traded well below its IPO price 6 months later to understand this is a non-metric. All it "means" as far as I can tell is that the traders who got their 'bump' in the IPO wanted to dump their holdings and so have been continually selling. It will be really interesting when internal shareholders (aka employees) get unlocked and can sell their shares. A lot of people using their now vested and tradable equity to convert it into something like a down payment or a new car. Once that first wave has passed, then you can start looking at the stock price and trying to see what the market thinks of the company.
>"All it "means" as far as I can tell is that the traders who got their 'bump' in the IPO wanted to dump their holdings and so have been continually selling."
Can you explain what is a 'bump' that traders get in the IPO?
Simply put, most IPOs are 'priced' such that the stock will go up after the IPO. So traders during the roadshow agree to buy shares at the IPO price and then they turn around and sell those shares for a profit when the stock goes up and people (nominally retail investors) are trying to buy the stock. They do this carefully so as not to put the stock in a huge tail spin.
So lets say you're Fidelity, and you've got a billion dollar fund, you take 10 million out of that, commit it to the IPO and sell it when the stock goes up 20%. You now have 12 million to put back into your fund and you've added 2 basis points to the "return" for your fund (shares are now worth 1.002 B$.)
The trick though is that you are not really "investing in SNAP" so much as you're taking advantage of a pricing advantage of a highly anticipated offering.
Sure, the "road show" is to sell to big institutional investors like pension funds, sovereign wealth funds etc but not to "traders" per se. I think that's what confused me. I'm guessing someone like Fidelity might have their own trading desk?
The difference with FB was that it rapidly shifted out of its "exclusive" user group by expanding outside of university email address holders to allowing everyone and their grandma from joining. Once Snap inevitably cleans up its UI to stoop to trying to attract older audiences, what appeal will it have?
Want to know what the stock is going to do? Look at your order book in PM on lockup day. Liquidity on either side will indicate short term direction, and the liquidity vacuum on the other side will indicate longer term direction.
disclaimer: short term is 10-15 minutes, long term is 1h or more up to RTH close
I just don't like what Snap did to the Windows Phone platform. They consistently blocked all opportunities to place an app on the service even when offered to do so with some form of partial or total subsidy (citation needed, but I'm pretty sure I'm referring to 6snap here).
So in that regard, I'm oddly happy about what's going on.
The problem is that (effectively) no one uses that platform. It's not just the initial creation that is the problem - maintaining a windows phone app over the years to come would be a real pain in the ass, and would slow future updates.
I think people are writing off Snapchat prematurely after its first soft quarter. It takes a long time to build a successful advertising driven consumer application.
I agree that Facebook’s aggressive cloning of stories has impacted Snapchat but I think Snapchat is more than just a one feature company.
I’d give it at least a year or so before declaring Snapchat a losing proposition. I say this because making significant changes to a product at Snapchat’s scale, I.e shipping new features, takes time.
Unlike Twitter, I’ve been impressed with the amount of product that Snapchat has shipped over the last few years. I think the ability to ship a lot of product is a key thing that a lot of arm chair analysts neglect when talking about these applications.
I’d also add to the above that I think a lot of people on his thread see Snapchat and Instagram as interchangeable applications. I’m not so sure about that. I use both for very different purposes.
Another point people seem to forget is that Snapchat own Bitmoji. That app has been consistently in the top 5 apps on the AppStore every time I’ve checked over the last 6 months.
I think the fact that Snap were able to buy another social company and not mess it up is highly underrated. Especially when you compare Bitmoji to what happened with Vine at Twitter.
Most of the comments here already talk about UX or other standard 'issues' with Snapchat, so I wanted to raise a different one—
On Snapchat, there isn't much to do once you're done seeing your friends' snaps.
Instagram has an amazing discoverability feature, plus, you can go around visiting other people's profiles as long as they are public. Ditto on FB, where there is an endless list of things to do and see and explore without interacting with anyone or letting them know of your actions.
On Snapchat, there is nothing of that sort. Snaps are temporary, Stories only stay for 24 hrs, and you can't see anyone's content without them getting a notification (last I checked).
Sure, this prevents 'stalking', but that comes at the cost of engagement.
You get notifications when people people send you snaps. 24-hour stories don't need you to be on the app the whole time. For example, I check my Instagram and Messenger stories once a day and that is good enough.
Worth pointing out that tech stocks are down heavily in June, esp. consumer tech [1]. Some portion of this decline is unrelated to investor confidence in Snapchat relative to FB etc.
The stuff that made Snapchat fun i.e Filters, Stories are becoming native to the platform e.g through ARKit and being copied aggressively by Zucker Zucker. I feel sorry for them, even though they were a pioneer into to leverage the smartphone's camera. Irrelevant but maybe relevant point, is us college guys mostly use it to chat with girls or just to be sure girls we wanna fuxk look good.
I'm no expert on snapchat, but one thing I can say from personal experience being at an IPOing unicorn -- until about a year into our IPO, we were a "no buy", and all of these giant companies were ostensibly going to crush us with products that didn't even compete with us. Then, one year and a couple of earnings calls in, we're suddenly a "buy" and people consider us stable and successful. What did I learn from this? Never trust the stock market, and doubly so do not trust the stock market with a new stock.
On Hacker News we are enthusiastic about Snapchat as a technology without any value in terms of being technologically interesting or useful. But yet we are littered with blockchain skeptics.
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[ 5.6 ms ] story [ 363 ms ] thread- no control by stock owners
- no immediate plans to produce profits
- whistleblower lawsuit in the works by former employee who claims they seriously inflated user metrics
- a shitload of shares about to become free trading, with a declining share price, you've got to think alot of employees are going to go stampeding to the exits rather than holding
- record short interest by the street
- one of the main IPO banks (JP Morgan) just cut their target from $20 to $18 for the stock,
- The same bank doesn't have an almost guaranteed BUY rating on the stock, and has rated it as a HOLD/Neutral, which is the equivalent of a sell in sell side analyst parlance
- a miss on their first earnings
- their biggest rival, Instagram, is doing well in competing with them, and they have Facebook's large pile of money and audience behind them
- and the macro climate of people expecting a market cooling coming soon, in those cases people tend to flock away from speculative companies to the old fashioned kind that make money.
SNAP might be a long term good company, but its going to be a rocky ride in the short term.
> record short interest by the street
This is double counting the same thing. The reason there's short interest is because there's a bunch of employees that would like to sell now but cannot. I suspect that much of these short positions will close out when the lock-up ends and employees sell into the market.
I wouldn't be surprised if there weren't back-channel deals along the lines of "you short it now and close when my lockup period ends, and I'll use my locked-up long position to unofficially hedge for you".
But realistically... you know non-wealthy stockholders(ie employees) want to cash in, so you buy into the retail sell-off on lockup day, bid it up 3 points, then close when you see the other retail buyers chasing the rally. Closing several thousand long shares should be sufficient to run their stops, depress the price, and present you with another buying opportunity at or near your original entry price.
All that said.. guessing what will happen with the market is how you lose your money, and fail at day trading before you ever got started.
They didn't agree to anything in the RSU agreement and no long as the spouse wasn't acting on insider information and simply wanted to hedge, I'm not certain a crime would have been committed, unless the person owning the shares actually asked their spouse to perform this action.
If anyone holding RSU's is (legally) able to show the RSU agreement, it would be insightful to read.
That is illegal and most certainly not happening. Those shares aren't even available to short in fact. Yes, naked shorting does take place and shouldn't but that's nothing to do with this.
This is fake news.
The S&P has an average PE of 15.6. That brings us to $218bn.
It's mindboggling any of you can think FB would drop back to IPO valuation at this size. Maybe in 40 years when the world has changed dramatically and most of us are retired or dead.
Has anyone seen/heard about the Spectacles used since the initial hype?
[1] https://www.last10k.com/sec-filings/snap/0001564590-17-01035...
Facebook is clearly the follower here, there are a number of awkward jokes and it's clear Facebook doesn't "get" AR or the Snapchat userbase. Snap is the first (primarily US) company to actually get users to use AR and QR codes (in the form of Snapcodes), not to mention the first social network to do it.
Spectacles are the first camera that helps you experience video from the perspective of the person taking it. This is actually a long time coming, for anyone who watches Snapchat with the headphones in (think every kid 27 and younger because they are always listening to music), Snapchat is a very immersive experience -- today's mics are very sensitive and the realism of Snapchat makes you feel like you are there. Spectacles just take that to the next level, they will already be ready as immersive video glasses become popular.
I'm way long on Snap philosophically but do not hold a position. I'm also in the AR space and I see Snap in the lead.
[0]: https://www.engadget.com/2017/04/18/facebook-reveals-its-cam...
They made it very easy to order online, and I thought the initial rollout with the vending machines was a good way to build hype.
I'm honestly surprised SnapChat doesn't let you purchase Spectacles in-app, so there must be more to the story.
That's the beauty of their roll out. Keeping it out of the hand of SF techies during launch helped create a cool brand for these in a mainstream audience. Google Glass' association w geeks helped cement their failure in the broader market.
If he were expecting to see them in Sunnyvale maybe you'd have a point.
ehhhhhh
> If he were expecting to see them in Sunnyvale maybe you'd have a point.
yeah ok
Surprised noone has been working on a jailbreak for them though.
Facebook apps do some stupid shit, like in Messenger, why the fuck does the back button take me into a camera looking at my ugly mug? Why does swiping down from the top to get to the top of my messages list sometimes again open a camera to my double chins? What in the shit is going on with the stupid circles smack-dab in the middle of my conversation history? And why on earth can't I swap the camera around mid-video in an instagram vid?
But it's nothing, nothing compared to the crime against humanity that is the Snapchat UX. It is an abomination, and a buggy one at that. I've heard it's at least more responsive on iPhone, fine. I've even heard arguments that it's esoteric on purpose - you have to be young and "with it" to "get it." Friends have to ask eachother "omg how did you do that filter" or whatever, which allows a moment of millenial smugness. Fine, that can be a reason, and we can lump it in amongst the thousands of other UX charges we should levy against Snapchat.
Every time Snapchat's UI/UX is brought up on Hacker News it's praised as "it facilitates the joy of feature discovery!" (example: https://news.ycombinator.com/item?id=10859860)
It's a post-hoc rationalization that I am still not happy with. (even moreso 2 years later with more apps like Facebook/Skype copying Snapchat verbatim)
Instagram is not a "serious" photo app. It's strictly for fun. if you want to shoot serious pictures, you use a purpose built app, or heck, even the built-in app on your phone. Making the UI a hide-and-seek game, or at least abandoning traditional UI design for something that puts form over function makes sense in that context.
There's an actual game on Steam called "Please, don't touch anything" where this kind of random discovery is the whole point.
Not sure I'd prejudicially dismiss it as "millennial smugness" though.
The original was a web game way back in the day called "Don't shoot the puppy". When I realised what was going on I nearly died laughing. My flat mates thought I was having a seizure.
http://store.steampowered.com/app/354240/Please_Dont_Touch_A...
It is a funny sort of opposite of games the "The Room" where you are indeed supposed to touch everything.
Mix one part neglect and abuse with one part intense pleasure from finally getting what you were looking for. Enjoy your Stockholm Syndrome cocktail, rinse and repeat.
Old people wonder 'WTF is this Snapchat?', they download the app, dick around with it for a few minutes and dismiss it as incomprehensible. It's a feature, not a bug.
You can more or less click away like on a good old Kodak Instamatic while retaining full control of every aspect of your picture if you wish.
IMO, Snapchat should be the easiest to decentralize and federate b/c the ephemeral nature allows expectations to be set for simple hosting like Digital Ocean. Who cares if data gets deleted?
I think the Snap interactions are at least freshly thought out for mobile. Vertical video because that's how you routinely hold a phone. Swiping from the edges of the screen as a primary interaction, etc
When I say badly built I refer to how slow it runs, how much battery it consumes (hint, a lot), the fact that until recently when Google literally forced them to do it properly, the app took pictures by saving a screenshot of the viewfinder.
An interesting article on Snapchat : How Snapchat Built a Business by Confusing Olds
https://www.bloomberg.com/features/2016-how-snapchat-built-a...
I agree completely, Snapchat is a horrendously designed app, especially when compared to an extremely intuitive one like Instagram. It's a miracle youngsters are fine with the learning curve since kids are getting less patient when it comes to learning nowadays. I guess the stories and filters were worth the trouble? Who knows.
In general, I think that Snap is one of the luckiest unicorns out there. Also, the fact that they have yet to come up with a new product -- other than those silly glasses -- does not help their case much.
You have swipable 3 tabs, messages, camera and stories. Is that so complicated?
How do you get to "settings?" I just opened the app. I see the snapchat logo in the top left, a... search bar? For searching what? Who knows. There's what's probably the flash icon, probably a switch camera icon. Then there's a messages bubble, and a... bubble with three dots... Also there's a bubble right underneath the biggest bubble (camera take picture button I assume) with what looks like... a picture? God knows what that does. I click it. It's memories. Great, not sure why i'd need to see that but fine.
Back, messages bubble. Messages, cool.
Back, three dot bubble. Stories. Riiiight. Still no settings. "My story" has a settings icon but that's something else.
Back, ghost button. Holy shit a settings icon. Got it!
Making Snapchat easy to use by parents would be a disaster for them, people are not engaging with content and posting to Facebook because their grandmother uses it and would see it.
I think that a lot of the weird design choices in Snapchat are intentional and very well thought out.
I have no problem at all with Snapchat's UI and can't understand why "old" people complain about it so much. did I know how to do everything at first? no, but it was easy, just swipe left/right/up/down and tap a few places. just because it doesn't follow the conventional ui/ux paradigm doesn't make it confusing or hard, just different (and these days, not that different, since a lot of other apps are copying snap's gestures)
the issue I do have with snapchat is that I'd like to see more interesting snaps and people to follow (who are not my friends) and the app doesn't help me with that. I'm basically limited to a few people who don't snap that much and I hardly use the chat function. I think this is where instagram one ups snapchat (the fact that ig's main content isn't ephemeral kinda helps).
I'm waiting to see what Snap comes up with (they have to come up with something, otherwise they'll be doomed).
Anecdotal evidence: I know numerous people over 25 who have installed snapchat once and even twice (at an attempt to use it again) only to uninstall it after being unable to figure out how to use it. But the recent college grads and younger all get it.
Adults right before they start earning and kids who it's illegal to advertise to in many jurisdictions.
I think the UX barrier is a post-hoc generalization. Of all places, people on HN would agree that we tolerate (and often even embrace) much worse UXs if we are sold on the functionality. The git CLI is a mess, but it's far too powerful and functional a VCS to just ignore, for example.
Sure, if the UX were nice, everyone would want to try Snapchat on their own, but there's a good chance you are not on the app because your friend group is not active on it, OR you don't care as much about the stuff they post on it. After all, it's social app.
on desktop the constant ping to install an ios app, but you're on x86 man. that constant prompt of the camera button when I'm on a x86. it may have worked when mobile was your roots, but you have to grow beyond mobile-only to at least allow other views.
granted somebody like Benedict Evans would say x86 is dead, but why kill the views, its cheap to produce ?
- Instagram Stories
- WhatsApp Status
- Facebook Stories
- Messenger [My] Day.
Though anecdotally for myself and asking some people, it seems IG Stories is used more than all others combined (plus FB released the stats that it is more popular than Snapchat). After a huge drop off, it's either WhatsApp Statuses or Facebook Stories depending on who you are. I don't know if anyone uses Messenger Day.
Then why the hell was there an IPO?!?!
Snap is a volatile play: there's a high chance, maybe bigger than 50%, that it never becomes profitable, as they warn, and there's some small chance it becomes extremely profitable. The real question is, what's the net present expected value?
http://www.marketwatch.com/story/snap-short-sellers-bet-on-a...
Why does everyone and their uncle think they can predict stock movements with lockup periods?
They don't. But every amateur with zero experience does.
How often is it that the now-huge tech (or any industry) firms DON'T go through trying times when they first appeared on the markets?
-Apple kicked Steve Jobs out of the company convinced the monolithic giant IBM was going to cut them out of the equation.
-Amazon almost went bankrupt when the market crashed
-Facebook dropped for almost a year when it wasn't obvious how they were going to monetize their mobile platform profitably
-Nike got hit with a customs battle brought on by Converse for millions
Obviously it remains to be seen whether they will show the resilience the aforementioned companies did but the fact that some are already speaking of Snap in the past tense is kind of crazy, they've had ONE quarterly report come out since the IPO.
this isn't me saying "Now's the time everybody! Pour your entire retirement fund into SNAP before it's too late!" it's an admonishment for the short-sellers sucking in the inevitable negative media headlines around any hot IPO as fact.
https://www.cnet.com/news/amazon-com-ipo-skyrockets/
Snapchat's total revenue for 2016 was $405M, with net loss of $514M.
The two are not even remotely comparable in terms of financial soundness.
The last time Amazon was worth less than $20 billion was back in March of 2007 [1]. The month prior, they announced results for FYE 2016 [2]. That year, Amazon had net sales of $10.7 billion on which they made a profit of $190 million (page 47). Amazon's operations, meanwhile, produced over $700 million of cash from operations (page 46).
Snap shows $150 million of Q1 2017 revenues. They managed to turn that into a $2.2 billion loss [3]. Next to that, the $150 million of cash their operations lost looks like chump change. (Snap incurred a $2 billion one-time non-cash expense in Q1, so the revenue and cash-from-operations numbers are better for comparison purposes.)
Keep in mind, too, that $1 in March 2007 bought as much as $1.19 bought in March earlier this year [4].
[1] http://www.macrotrends.net/stocks/charts/AMZN/market-cap/ama...
[2] https://www.sec.gov/Archives/edgar/data/1018724/000119312507...
[3] https://www.google.com/finance?q=NYSE%3ASNAP&fstype=ii&ei=f_...
[4] https://www.bls.gov/data/inflation_calculator.htm
To be fair, a big chunk of that loss was due to many years worth of equity-based compensation (stock options) all booked at once.
It is true that all these high-growth companies go through major adversity on their way to the top, but this is where most end up failing. Just like every other high-growth company, Snap's valuation is predicated on atypical future results.
Even without adversity they have a tough road ahead. I would posit that there's a good chance the executive team & investors saw the writing on the wall and took the company public to get out before it totally collapsed.
It was a pretty strong signal that Evan & Bobby are primarily money-driven when they took $10M each off the table during the B round. Other notable companies where founders have done this sort of thing have resulted in fast spike-and-collapse results: Foursquare, Zynga, and Groupon.
Zuck didn't take an early multi-million dollar cash-out. The Instagram founders didn't either -- they were living in 1-bedroom apartments a year after the acquisition. Founders who believe in the long-term success of a company don't tend to get rich off a company that has not yet attained either their vision or produce significant wealth for itself. Obviously causation != correlation, but this is a pretty strong signal about the motivations of the founding team.
It's certainly their prerogative to cash out early. I'm not making a moral judgement here. However, as a value investor this is a useful signal for high-growth tech companies. This all sounds incredibly cliche, but I just don't see signals that lead me to believe Evan & Bobby have motivations in the same category as Bezos or Zuck or Jobs. All the signals are that they appear to be looking to get rich to live a life of luxury, not build their life around their company. As a human, I personally would prefer the former. As an investor and employee, I want to put my money and time into companies lead by the later.
[Disclosure: Former Instagram & Facebook employee. I don't currently own any Facebook shares]
- Apple was a company that sold computers. SJ being kicked was an relevant event for the company, but it still sold computers and was worth something.
- Amazon was an intermediary between sellers and buyers. Today is a company that invested a lot in other things and is worth something.
- Facebook could be monetizing something, but it's still just a webpage. Remains to be seen if it's worth something, so their shares are crap (this is from a fundamental point of view, regardless of whether they keep rising)
- Nike sells shoes. It's worth something, though it's not a fundamental company for the market.
SNAP, on the other hand, has some face recognition algorithms, and created a free app. That's it. It produces nothing. It's a worthless company when it comes down to the assets it has and the product it sells.
Selling something vs nothing is a good metric to think about, but "advertising" is certainly not nothing. In fact, it's a multi-billion $ industry. It just so happens to be dominated by Google and FB currently, who are both "fundamentally" selling something real.
I think one could've argued at the time that Apple wasn't worth something because they were the struggling vertically integrated supplier of consumer based computers in a sea of horizontally integrated providers. It wasn't until they got more of a foothold everybody started seeing the benefits of software made to run on a single type of device.
Intermediaries have increasingly become devalued over time as digitization has meant there's less and less of a need for middle-men. Hence why Amazon's surge has come on the heels of providing Entertainment and Cloud services, something intermediaries in their space never did before.
Facebook yeah I suppose, the fact that they have margins almost no other company could dream of kind of rationalizes it to a strong degree though. All in all, I see where you're coming from.
Nike yes I see where you're coming from.
Disclaimer me posting that comment wasn't suppose to be a riot act that Snap's going to be the next $400+ billion dollar company, I'm as skeptical as most about the future prospects. However, I'd argue against saying they produce nothing. The fact that they are anti to the leading social media provider (of sorts) gives them a production point. As demonstrated in their reports, their user's incessant check in's on the app despite any Facebook-esque notification stream to keep them coming back is pretty envious (in my opinion).
Whoever that "someone" is, probably isn't as experienced in the markets as you think.
The concepts don't translate, that's for sure. However, to claim that Facebook is worth something if they just keep collecting data and we see nothing being done with that, is just wishful thinking.
Amazon invests in research and built a PaaS/SaaS service that's worth a lot. It innovates on several products like Kindle and Echo. Owns patents that are worth something.
What's the ACTUAL commercial value that Facebook is bringing to the world and to people that's making it so worthwhile? Sharing pics? Getting customized newsfeeds? Having yet another channel to communicate with your aunt or with that customer service? What do we lose if Facebook goes away tomorrow?
It's the model that has worked for TV, Radio, and Newspapers but in the new world the integration points are different from those old models making the chain of value much different.
Here's a short article that'll help explain it better than I can: https://stratechery.com/2015/aggregation-theory/
By your friend's logic, AirBnB doesn't have any value either.
Yes AirBnB is a glorified hotel reservation site, but isn't a car just a glorified horse and buggy? I guess I just don't understand how you could be so dismissive in the face of something so clearly valuable and so clearly wanted by the market.
Can you explain what is a 'bump' that traders get in the IPO?
So lets say you're Fidelity, and you've got a billion dollar fund, you take 10 million out of that, commit it to the IPO and sell it when the stock goes up 20%. You now have 12 million to put back into your fund and you've added 2 basis points to the "return" for your fund (shares are now worth 1.002 B$.)
The trick though is that you are not really "investing in SNAP" so much as you're taking advantage of a pricing advantage of a highly anticipated offering.
We had similar blogposts about facebook - even google to an extend.
disclaimer: short term is 10-15 minutes, long term is 1h or more up to RTH close
So in that regard, I'm oddly happy about what's going on.
I agree that Facebook’s aggressive cloning of stories has impacted Snapchat but I think Snapchat is more than just a one feature company.
I’d give it at least a year or so before declaring Snapchat a losing proposition. I say this because making significant changes to a product at Snapchat’s scale, I.e shipping new features, takes time.
Unlike Twitter, I’ve been impressed with the amount of product that Snapchat has shipped over the last few years. I think the ability to ship a lot of product is a key thing that a lot of arm chair analysts neglect when talking about these applications.
I’d also add to the above that I think a lot of people on his thread see Snapchat and Instagram as interchangeable applications. I’m not so sure about that. I use both for very different purposes.
Another point people seem to forget is that Snapchat own Bitmoji. That app has been consistently in the top 5 apps on the AppStore every time I’ve checked over the last 6 months.
I think the fact that Snap were able to buy another social company and not mess it up is highly underrated. Especially when you compare Bitmoji to what happened with Vine at Twitter.
On Snapchat, there isn't much to do once you're done seeing your friends' snaps.
Instagram has an amazing discoverability feature, plus, you can go around visiting other people's profiles as long as they are public. Ditto on FB, where there is an endless list of things to do and see and explore without interacting with anyone or letting them know of your actions.
On Snapchat, there is nothing of that sort. Snaps are temporary, Stories only stay for 24 hrs, and you can't see anyone's content without them getting a notification (last I checked).
Sure, this prevents 'stalking', but that comes at the cost of engagement.
I'd argue that this does keep you coming back regularly to see what's new
[1]: http://www.cnbc.com/2017/06/09/big-five-tech-stocks-sell-off...