
Snap Tumbles Below IPO Opening Price as Analysts Say Sell - chollida1
https://www.bloomberg.com/news/articles/2017-03-06/snap-tumbles-for-first-time-since-ipo-as-analysts-say-sell
======
wayn3
Here's one thing people somehow don't understand.

An IPO is a mechanism for a company (and its investors and other stakeholders)
to sell shares in exchange for money.

The investment bank that facilitates the IPO has the job of "marketing" those
shares (and doing the administrative stuff around the IPO).

The goal in selling something is to get the best possible price. Therefore, a
stock price that goes up at the date of the IPO and then declines below the
initial price is the GOAL. It means the bank has done its job well. It got the
maximum amount of money out of buyers.

If the price stood level, it would mean the bank had left money on the table.
If the price went up immediately and then STOOD THERE, it would mean the bank
severely underpriced the IPO. Thats the worst case scenario. If the price dips
immediately and nobody buys, it just means the IPO was overpriced.

This also means that buying at IPO means that you're getting screwed unless
you want to hold longterm. You're always paying a premium, unless you believe
that the investment bank made a mistake. And you obviously have more data to
make that bet than goldman sachs does. Obviously.

As a smalltime investor, for whom there is essentially unlimited liquidity in
the market, just don't buy IPOs. And don't get excited over IPOs dipping below
opening price. It just means you don't understand the mechanism.

~~~
codingdave
OK. They IPOed. They got their money. That part of the story is done. Now the
stock is in the pubic's hands. Analysts think it is over-priced, so people
sold. And an article said so. This is just some basic reporting on it. I'm not
sure why you are choosing to use it as an opportunity to call people out as
being ignorant.

~~~
adelpozo
Well, I did learn something from that comment. I guess I am ignorant. :)

------
PhilWright
I love the way all reporting of stocks has to show the stock either 'surging',
'soaring' or 'tumbling', 'crashing'. An IPO priced at $24.00 that sells three
days later at $23.77 has not tumbled. Sure, it was relatively volatile in the
first few days but that is common on high profile IPO's until the price
settles to a market determined level.

EDIT: No doubt if it rises to $25.00 tomorrow it will have 'rebounded' and be
worth another hyped headline.

~~~
slededit
If a 12% single day drop doesn't count as a tumble then what would in your
definition?

~~~
encoderer
You have to take it in context of relative volatility. There are products
where a 12% move wouldn't be notable. In this case, it's under a week old.
This expected volatility is why market makers do not sell options on ipo
issues for a little while.

These kinds of stories are like basing a climate change story on unseasonably
warm weather.

~~~
beejiu
In other words, people are using the market to determine the valuation rather
than using the valuation to determine the market.

~~~
encoderer
This is how the market works. It's crowd sourcing valuations. It's not a bad
thing. Do you have a better way to determine the valuation of a complex
business?

~~~
beejiu
The purpose of the market is not to determine valuations, it is to facilitate
transactions. The transactions happen at different prices (very close
together) - the idea is the market participants (buyers and sellers) have
their own ideas about valuation and enter transactions accordingly. All else
is speculation.

~~~
JumpCrisscross
> _the purpose of the market is not to determine valuations_

Promoting price discovery [1] is one of the fundamental features and functions
of a market.

Side note: the line between "speculation" and "investing," where the former
refers to short-term shareholding and the latter to a specific set of Graham-
Dodd valuation models, is not a general economic term. It only makes sense
when discussing Graham-Dodd investment styles, which are a subset of long-term
financial investment styles, which are themselves a subset of the market.

[1]
[https://en.m.wikipedia.org/wiki/Price_discovery](https://en.m.wikipedia.org/wiki/Price_discovery)

------
nodesocket
While I don't believe that $SNAP financials are solid (I am bearish), I do
applaud them and Mulesoft for going public.

Too often today large (well past series C) tech companies (I won't name any
names) refuse to go public and instead continue to take private equity and
foreign investment and prop themselves up on absurd valuations with no-checks
and balances. Some of these companies are absolute dog shit, yet they continue
to receive unlimited funding and insane valuations in a vacuum with no market
to short them. Wall Street calls bullshit when they see it, and smart people
short bad companies when they find them. Silicon Valley doesn't provide a way
to short these propped-up companies, they just continue to self-promote
themselves on private equity and foreign investment.

~~~
wapz
I don't understand what the advantage of companies going public is. If they
are public don't they have to essentially "force" profits for their
shareholders? Wouldn't a company that has a sustainable income that doesn't
want to grow be better off staying private where they can be "themselves?"

~~~
nodesocket
Hoping others with intimate knowledge of investment banking and the market can
also chime in, but here are my thoughts.

1.) Raise substantial additional capital for R&D, growth, new products, pay
down debt, etc.

2.) Exit event. Allows founders, employees and pre-IPO investors to "cash
out". Typically at nice fat returns since they get heavily discounted shares.

3.) Increased public awareness since IPO's usually have media coverage and a
general frenzy.

~~~
adventured
4) Use outsized market cap for acquisitions. Facebook for example picked up
Instagram for a billion dollars, in large part (~70%) using its very lofty
valuation/shares as exchange. Basically in net an incredibly cheap acquisition
of an incredibly valuable property.

------
JumpCrisscross
Before Snap's IPO, I declined when asked to make predictions. But I did say
what I thought would be the best for venture-backed companies in the long run.
It is a small pop on IPO day followed by a months-long drag down to a
reasonable valuation.

The small pop would signal healthy IPO conditions. The slow run down would
show investors aren't in full-throttle bubble mode. We got the pop, plus some,
as well as the the drag down, albeit sooner and faster than expected. If SNAP
continues to between here and the offering price we can still chalk this up as
a win for SV.

(Keep in mind, Facebook--whose revenues grew 54.2% from FYE 2015 to FYE 2016--
trades at 14.4x FYE 2016 revenues. That implies a $5.82bn valuation for Snap.
It's trading at a $30.4bn valuation, or 5x higher.)

[1]
[https://www.google.com/finance?q=NASDAQ%3AFB&fstype=ii&ei=4-...](https://www.google.com/finance?q=NASDAQ%3AFB&fstype=ii&ei=4-i9WIGIJ8fDjAGq1p_YCw)

 _Disclaimer: this is not investment advice. Please don 't be a numpty and buy
or sell securities based on Internet comments._

~~~
jacquesm
> we can still chalk this up as a win for SV.

But a loss for the investors that bought the stock on the open market. So even
if you think that's a good thing it will definitely reduce the chance of
seeing another pop with the next IPO.

A 'drag down' is never a good thing for a stock.

~~~
komali2
The point of his post is "it's good for Snapchat in the long run - it
indicates a healthy company."

So, it's very good for investors who invested in the _company_ , i.e. the
sorts of people that won't be selling the stock within 2 days of buying it.
They'll hold on, and presumably make money in the long run as the values drag
down.... and back up beyond the ipo value.

~~~
prodigal_erik
This company isn't offering voting rights nor planning dividends. What's the
benefit of owning shares, other than trying to choose the right moment to sell
them to other speculators?

~~~
dlubarov
The benefit is that you might receive dividends later on, after a period of
revenue growth.

Granted, it'll be years if not decades before SNAP pays a dividend, if it
succeeds at all. But on the flip side, SNAP's future dividends could turn out
to be worth much more than the current price, even after discounting for risk
and the opportunity cost of your capital.

------
ucha
It's below the _opening_ price which is not a big deal. FB on the other hand
quickly dipped below the _offering_ price. If the 3 days expected value of a
recent IPO is significantly different from the opening price, that would
create an easy arbitrage opportunity.

~~~
lisper
> It's below the opening price which is not a big deal.

It is if you bought at the opening. Retail investors don't get to participate
at the offering price.

~~~
elastic_church
yeah but it isn't as headline worthy. There is a syndicate of investment banks
legally propping up the price at $17 for a short time. If selling pressure
somehow breaches the syndicate bid, HOUSTON WE HAVE A PROBLEM.

~~~
lisper
Yeah, that was kind of my point. Whether or not it's a big deal depends on who
you are.

------
jondubois
Their finances look horrible; worse than Twitter. Unlike Twitter, however,
they make almost 0 Gross Profit (not even counting admin expenses and R&D). It
looks like they're counting entirely on growth but the revenue numbers still
look very small. Twitter's revenue is $2 billion+, Facebook is $27 billion+.
Snap's $400 million looks measly by comparison especially when you consider
the expenses incurred.

~~~
iaw
Their growth figures look really bad relative to Facebook at the same stage.

~~~
adventured
It should, they're not the next Facebook. No social network is going to be.
Facebook managed their growth rates, in a mostly open field, while not having
to compete with another social network quasi-monopoly with 1.2 billion daily
actives.

------
soheil
It is amazing how a few analysts can change how much a company is valued on
the stock market. Has the opinion about Snapchat on tech forums like this,
whose opinion should matter since we're literally the people who built it have
significantly changed since two days ago to justify a 4 billion dollars price
change?

~~~
DougN7
There are many of us techies who think it's rediculously over priced. It's
cool with teens because their parents aren't there. Teens are fickle and will
move on, especially if parents show up (or those teens stay around long enough
to become the parents). I give it 10 years.

~~~
erikpukinskis
So you're saying it will get turned over to the parents, at which point it
will become worthless? Like Facebook?

~~~
edblarney
"at which point it will become worthless? Like Facebook?"

Every company goes through the hype phase. What is 'left over' is usually the
raw utility of the product.

'Parents' got onto Facebook and continue to use it = some degree of utility.
Teens 'stay on' because of the ubiquity of it.

Snap is not Facebook. It's very possible that 'parents' never go onto snap,
because it offers them little outside of messaging. 'Sharing moments' is just
not what people > 30 care to do that much. Maybe some, but not likely a
critical mass.

Furthermore - even these features are somewhat faddish among the young.

There is a very real possibility that Snap is a huge fad, with very little
underlying utility.

Now - Snap is different. They refer to themselves as a 'camera company' so
maybe they can keep innovating, but I'm doubtful.

But if they position themselves as an 'aspirational youth brand' \- then they
might stay relevant.

Think: Nike, Lululemon - they make pretty good gear used by 'real
atheletes/yoga types' \- which gives the brand enough validation for you and I
and other chumps to pay $$$ for their gear while we sweat it out.

They are LA based, which is good for that. Also - those 'snap glasses' \- even
though they were not very 'useful' \- actually were a brilliant bit of
marketing, and hit the zeitgeist of relevance perfectly.

So either/or:

1) They make an app that appeals to 'everyone' \- which I doubt.

2) They continue to innovate in 'camera/sharing/experience' perpetually, which
I doubt.

3) They can stay cool. Which I also doubt, but wouldn't put it pas them.

Again the issue is also real valuation: $25 Billion is a lot of valuation for
a company that's not making any money. I don't care what their 'growth' is.
What matters is 'how big they can grow, how well they keep customers, and how
well they convert on them'.

I'm doubtful that Snap - as we see it today is going to grow into commodity
usage.

Twitter has I think a broader appeal - and look where they are.

Facebook did not change that much from after their IPO - the product offer is
largely the same. The same thing millenials used, their parents and
grandparents used. I don't think Snap can say the same.

They _could_ be succesful, but there's a lot more risk in it than say, FB -
and that risk should be reflected in the valuation.

~~~
erikpukinskis
If Snap is not Facebook, why did Facebook hustle to get Messenger out? Snap is
messaging. Messaging kind of a big deal.

Any company can own any of a number of corners of the social media space.
Facebook can't eat Tumblr unless Tumblr drops the "commentary is king" ball.
Snap can't eat Instagram unless Instagram drops the "streams of nice pictures"
ball. No one company can control it all because there are many different
social physicses and people can only handle a few physicses under a single
brand name.

And no one can eat Snap unless Snap drops the "send media to your friends
right now" ball.

All Snap has to do is execute. Sure, they could stumble over themselves, but
person-to-person media rich messaging is theirs to lose.

~~~
edblarney
FB got messaging out because yes, it's a big deal - it's THE deal in mobile.

Snap is not really messaging - it's 'sharing moments'. It's not really very
good as a 'simple messaging app' \- unlike FB, which is very basically
messaging.

My mother will use FB messenger, she won't use Snap.

'Basic messaging' is the ubiquitous thing, 'Enhanced messaging is 'niche-ish'.

Snap definitely could go to ubiquity, but I don't think they will. Maybe.

~~~
erikpukinskis
Thanks for the analysis. I have only played with Snap on friends phone s.
Sounds like Twitter is a better comparison then?

I guess when I am thinking about "messaging" I am just thinking 1:1 or 1:few
publishing and private. Which Snap is (mostly? Kim Kardashian is on there so
semi-public)

The distinction between media capture and text is interesting though. I
haven't thought about the possibility that those are fundamentally different.

------
swingbridge
The company's financial fundamentals are terrible. The only thing holding the
value up is fluff and hot air. If people get less excited by that the price
goes way down and that's what happened today. If people really really lose
excitement the price will fall like a rock since there's no typical financial
fundamental circuit breakers (like P/E ratio) to stop the thing from just
going down down down.

------
panabee
It is difficult to comment on whether Snap is overvalued without analyzing its
potential worth. Instead, here are a few observations about Snap's business:

* It seems unlikely Snap could plummet in popularity over a few months like some mobile game or Taylor Swift song. If Snap flames out, the usage graph will probably decay more like Skype than Draw Something. The two prongs of its platform allow Snap to (1) enable communication like Skype and (2) distribute content like YouTube. Distribution and communication companies tend to decline much slower than content creators like Zynga.

* Snap's entertainment platform could finally crack interactive TV/video. This will be fascinating to watch unfold as Snap empowers content creators to create digestible, interactive video for the coveted advertising demographic of users aged 15-34. In particular, could adding a buy button marry video and commerce in a novel and lucrative way?

* Through videos and pictures, Snap can infer a lot about users: style, hobbies, habits, food preferences, and more. This is also a hidden treasure trove for Instagram and Facebook, but given the high frequency of Snap messaging, the data could be richer and more authentic with Snap.

~~~
panabee
[Too late to edit the parent]

The metric to monitor for Snap is daily engagement. Snap has all but confirmed
it will not play the MAU game [0]. This doesn't mean Snap won’t try to expand
the user base, but merely that maximizing MAUs isn’t the same priority as at
Facebook.

This strategy is risky because it means Snap must generate growth from
somewhere other than user acquisition, which is the typical playbook for
consumer startups.

On the plus side, this frees Snap to pursue an Apple-like strategy of pushing
the boundaries of coolness and innovation as opposed to diluting the service
until it's vanilla enough to reach 1B+ users. The more mainstream your aims,
the fewer risks you can afford with the core product.

Strategically, it may let Snap sidestep the trap that ensnared Twitter.
Twitter’s greatest sin was simply not being Facebook. Wall Street and the
media need a foil for every market leader, and Twitter has been sadly shoved
into this role.

Playing the MAU game is playing Facebook’s game, and Zuckbergerg has so far
dominated anyone who competes.

Focusing on daily engagement offers a chance to battle the lion in water
instead of on land, to position Snap as different from Facebook and pioneering
a different market. Unseating Facebook as the #1 social network is extremely
daunting for Snap, if not downright impossible. As Twitter today and AMD from
the 1990s can attest, life as the #2 player can be challenging. Wall Street
whacks you with much lower multiples, and the press is hardly any kinder.

Whether Snap actually convinces Wall Street and others to value them as
different from Facebook remains to be seen, but this route is not surprising
given Twitter’s carnage.

Even if Snap stumbles, what Spiegel and Murphy accomplished is nothing short
of extraordinary. They grew a pure sexting app into a $30B communication and
entertainment platform. This transformation didn't result from one "lucky"
choice, but rather a series of risks and enhancements over multiple years. If
you had given me 4-5 years to maximize the value of a sexting app, I think
maybe, in the most optimistic scenario, with all the luck in the world, the
app could have sold for $3M (with $0 as the likely scenario). What they did is
10000x greater than what I could have achieved under the same circumstances.

[0] [https://www.bloomberg.com/news/articles/2017-01-20/snap-
said...](https://www.bloomberg.com/news/articles/2017-01-20/snap-said-to-
stress-addicted-users-to-justify-20-billion-value)

~~~
richardwhiuk
Why does it matter whether Snap will play the MAU game? That's what analysts
will be measuring them on, whether they choose to acknowledge that or not.

------
chollida1
I thought this was relevant more so because of all the analysts covering SNAP,
not a single one has a but rating on it.

That's pretty unusual for a 10+ billion dollar company

~~~
GCA10
SEC rules say that underwriters (i.e. most of Wall Street) aren't allowed to
hype their own handicraft until a suitable number of days have passed. The
length of this "quiet period" keeps changing, but according to this article,
it's now 10 days on the books, with most underwriter/analyst firms choosing to
play it safe and observe 25 days of restraint.

[https://ipocandy.com/quiet-periods/](https://ipocandy.com/quiet-periods/)

~~~
wapz
What is a underwriters/handicraft? Are they writers paid by the company to
write bearish articles about them and have 'no' affiliation so there's no
disclaimer?

~~~
greenyoda
In an IPO, the underwriters are the investment banks who handle the initial
distribution of the stock. From Wikipedia:

" _Securities underwriting refers to the process by which investment banks
raise investment capital from investors on behalf of corporations and
governments that are issuing securities (both equity and debt capital). The
services of an underwriter are typically used during a public offering in a
primary market.

This is a way of distributing a newly issued security, such as stocks or
bonds, to investors. A syndicate of banks (the lead managers) underwrites the
transaction, which means they have taken on the risk of distributing the
securities. Should they not be able to find enough investors, they will have
to hold some securities themselves. Underwriters make their income from the
price difference (the "underwriting spread") between the price they pay the
issuer and what they collect from investors or from broker-dealers who buy
portions of the offering._"[1]

When the comment above said "underwriters aren't allowed to hype their own
handicraft", the "handicraft" he's referring to is the new stock that they
just distributed, and hyping it generally takes the form of the banks'
analysts issuing "buy" recommendations.

[1]
[https://en.wikipedia.org/wiki/Underwriting#Securities_underw...](https://en.wikipedia.org/wiki/Underwriting#Securities_underwriting)

------
wufufufu
Maybe the strategy is to start at obscenely overpriced so when you "tank" and
descend into just very overpriced, the market thinks you might soon return to
previous heights and you settle around there.

~~~
fullshark
The strategy was to get 3+ Billion dollars. It succeeded beautifully, and
since shares have no voting rights they don't have to worry about pressure
from Wall Street.

They will have to worry about talent acquisition/retention if the stock price
tanks though. But maybe that is offset in the short term by the appeal of
working for a company with public shares.

------
wernerb
I can't argue with the logic of the talk show guest, (who seems very good at
her job!)

They are dealing with economy of scale. If facebook+google have 90% ad
penetration then snap must displace facebook.

~~~
ucaetano
Displacing might not be the actual word. You could, for example, say that the
digital ad market will double in 5 years, and Snapchat will capture all of
that additional revenue, becoming bigger than FB and Google combined.

It wouldn't be displacing them per se, they'd still sell the same $ to the
same companies.

Will that happen? My guess would be on no. I don't think there's room for a
3rd large player in the digital ads world, Twitter tried to be it, but failed.
But hey, maybe Snap is able to do it (but I doubt it).

~~~
crazypyro
It displaces them in the relevant metric (ad penetration), so I think it still
fits fine in this context. It would be different if the original commentator
was arguing that Snap is going to displace FB/Google's current revenue.

------
AndrewKemendo
People keep saying that their financials are terrible, but last I checked they
were killing on Revenue [1] compared to the average IPO [2]. Especially if you
consider that average revenues at IPO have been steadily dropping since 2012.

Average IPO revenue 2015: $38M

SNAP revenue 2015: $58M

SNAP revenue 2016: $350M

Add to the fact that in 2015 on 30% of IPO companies were profitable, they
seem to be well within market bounds.

[1] [http://www.businessinsider.com/data-shows-nearly-half-of-
sna...](http://www.businessinsider.com/data-shows-nearly-half-of-snapchats-
revenue-comes-from-discover-ads-2017-1)

[2]
[https://www.wilmerhale.com/uploadedFiles/Shared_Content](https://www.wilmerhale.com/uploadedFiles/Shared_Content)

~~~
soVeryTired
Call me old fashioned, but I think it makes sense to value a company based on
profit rather than revenue.

------
josh_carterPDX
I have always found it fascinating the role analysts play to impact the price
of a stock. Today was the perfect storm of shitty news/advice that drove the
price down. Before this morning the stock was up in after-hours trading.

------
rmoriz
Most comments focus on $SNAP itself, but as JumpCrisscross noted: It's also a
bad sign for SV IPOs in general.

With the upcoming FED hikes and the recent stock market rally, one could say
that it will be a lot harder for late stage companies to aquire further
financial resources in VC/the private equity market.

After the $SNAP hype and crash the public market will probably not be willing
to invest in other tech companies in the next months anymore, at least not at
the current valuation level.

~~~
prostoalex
This market seems to over-reward profits (FB, NFLX, NVDA) and over-punish
losses (TWTR, SNAP).

~~~
rmoriz
The market is always right. I just don't believe anyone is willing to take
such big risks of failure anymore with so little chance of winning. SNAP was
priced so expensive and just to justify the 17$ it would need to make money
for years or grow exponentially. Which both didn't happen in the last couple
of years, growth is even declining.

~~~
prostoalex
The subset of the market called "equities traded publicly on U.S. exchanges"
is right within its own local maxima of pricing such securities, but it's
still subject to inflows and outflows, which depend on macroeconomic picture,
interest rates and attractiveness of other subsets.

Specific securities, sectors or the stock market in general still can be
overbought and oversold.

------
billions
Would it be possible for Facebook to execute a hostile takeover of Snap, now
that Snap is public?

~~~
fullshark
No, the shares have no voting power. They are Snapchat fun bucks basically.

------
sfilargi
Isn't this what happened with FB as well?

~~~
chimeracoder
There are a lot of differences between FB and SNAP.

The biggest two:

1) FB dropped on opening day itself, which was actually great for Facebook
(the company), but not so great for the Morgan Stanley bankers who were
underwriting the IPO. They overestimated the price that retail investors would
want to pay, so they overpaid Facebook for the shares.

2) SNAP is issuing only Class A shares, which are non-voting. Some other
companies have segregated classes of shares with different voting rights, but
according to SNAP's own S-1, they are the first company to have an IPO with
_only_ non-voting shares available.

Combine that with the fact that they have no plans to make a profit[0] or to
issue any dividends[0][2], and that means that the appeal to investors is very
limited: they have no way to influence company decisions, and no way to
participate in profits from the company. Those are usually the two biggest
contributors to the fundamental value of a stock.

[0] this is not my opinion; this is a direct quotation from their S-1: "We
have incurred operating losses in the past, expect to incur operating losses
in the future, and may never achieve or maintain profitability."

[1] Again, directly from their S-1: "We do not intend to pay cash dividends
for the foreseeable future."

[1]
[https://www.sec.gov/Archives/edgar/data/1564408/000119312517...](https://www.sec.gov/Archives/edgar/data/1564408/000119312517029199/d270216ds1.htm)

~~~
kgwgk
> There are a lot of differences between FB and SNAP.

> [1] Again, directly from their S-1: "We do not intend to pay cash dividends
> for the foreseeable future."

That's not one of the differences between FB and SNAP, the same risk is listed
in Facebook's S-1 (only the word "cash" is missing).

~~~
chimeracoder
> That's not one of the differences between FB and SNAP, the same risk is
> listed in Facebook's S-1 (only the word "cash" is missing).

I didn't say that was a difference - I said that their plans not to issue
dividends _combined_ with their unique voting structure was significant.

That disclaimer means something completely different when you're talking about
a company that is issuing stock with voting rights (even when the CEO has
majority ownership), as opposed to a company in which the stock carries
literally no voting rights.

~~~
kgwgk
Fair enough. But I don't think the situation would be any better if that
particular risk was absent from the filing.

------
verelo
Can we agree that trading at 93 times revenue should be the real headline
here? While I find it insane, and others will disagree, it's the real talking
point which ever side you sit on!

------
fratlas
Eh, just volatile atm. Interesting to see if it tanks big time.

------
tommynicholas
Yes it opened around this price, but the IPO price was $17. Another non-story
about a stock dropping in price after it grew like crazy just before the drop.

------
vit05
SNAP inc priced the public offering at $17 a share.

------
holri
'Weighting the evidence objectively, the intelligent investor should conclude
that IPO does not stand only for "initial public offering". More accurately,
it is also shorthand for: It's Probably Overpriced, Imaginary Profits Only,
Insiders' Private Opportunity, or Idiotic, Preposterous and Outrageous.',
Benjamin Graham

------
karllager
I hope I am not down-voted. I want to grab the opportunity to sum up my
impressions on snap, so I can come back a year later and read up, how stupid
they have been.

Snap is neither twitter nor fb, which of course is a source of uncertainty.
It's not twitter, because snap's data consists of a lot of internet dark
matter - so to speak - pixels, that is. Let hell break loose and buy up
machine learning engineers and researchers in bulk and let them poke around in
it. There sure will be some way to optimize ads, and then just sell it off:
the perfect blended ad to the right audience at the right time and space.

Is there anything more substantial beside fun? Yes, a nice social pressure
signal, millions of tiny celebrity effects playing out every day, together
with all the drama, gossip and emotion - which should have a positive effect
on ads. The score-rich - I mean the poor teen talent - gets a discount on a
product, that has been seen on other influencers (but not too many). The poor
pool of losers and in-betweens might buy a burger to get over the pain.

This social game is so much fun, it's even fun to just write about it. All
this drama, all this pain, captured on tape and stored on a shelve. Ready for
a smart machine to look at it and ask: I saw your face before, and the look of
yours on someone else, you look sad, you're mostly inside, I have the perfect
product to cheer you up, may I? And, oh, I make it fun for you to acquire it,
too.

You think this is scary? You think it's borderline exploitation, because the
data generators can be kept sad, if their score is too low?

Which brings me to my conclusion for the record. Snap will thrive part because
people just do not care about these things anymore and part because the
majority has not much choice. Stronger and more resistant individuals will
just reject the instant gratification and focus softening. People, who kind of
see through the hype and the value propositions, that maybe matter too you and
maybe matter, because somebody would like to make it matter for more people,
so I have to adjust. Maybe 80% of a population, according to some estimates,
does things, because everybody does them - no or few questions asked. And hey,
if all it takes to be accepted is a push of a button, what's the problem?

And so the story continues. Snap will thrive. One thing that would kill both
facebook and twitter (and snap) would be Moore's law, in the sense, that a
social network of friends can be held completely on the interactors devices,
because, well in few years, 128GB per phone is ok, text and messages are cheap
and can be routed without being stored and scanned and images can be stored
and cached locally.

But there is no money in letting people alone. No money, if I cannot distract
them. No money if I cannot read what they read and see what they see. No
money, if I cannot control them and their experience.

------
anonu
It may not be too clear from the headline - but analysts were saying sell
before the IPO as well.

------
remyp
The borrow rate my broker (IB) is quoting is 120% despite only 7.55% of the
float being short.

I guess the clearing firms just don't have any shares to lend out -- we could
see another price drop once the stock is easier to borrow.

------
daliwali
This IPO is yet another indicator of a civilization in decline.

Snapchat watches people in their most private, most intimate moments, who are
unaware that all of their data passes through centralized servers. Why should
states even bother with intrusive surveillance anymore, when people freely
offer to surveil themselves?

If Snapchat disappeared tomorrow, people would just upload their nude photos
elsewhere. Nothing of value would be lost, except for maybe the world's
largest, most centralized pornography database, with fairly reliable
correlation to real identities. That could never lead to abuse of power.

~~~
nailer
> Snapchat watches people in their most private, most intimate moments, who
> are unaware that all of their data passes through centralized servers.

I think most people who use Snapchat are still aware that Snapchat can see
their nudes.

~~~
daliwali
The average Snapchat user isn't going to think about the process of uploading
a picture to a central server which is then relayed to the intended recipients
and then deleted on the proprietary client-side application (which can be
worked around, the problem is that third-party may retain data indefinitely).
The average consumer is not that technically literate, consider the people who
think Facebook = Internet.

------
Grue3
Greater fool theory in action. Hope the people who bought it at IPO sold it
fast enough.

------
ganfortran
So is Snap going to be the next Facebook, or ... Twitter?

~~~
josu
pets.com

------
dorianm
It's barely below IPO price
[http://m.imgur.com/X58hugr](http://m.imgur.com/X58hugr)

------
fiatjaf
What is "Snap"?

~~~
justinsaccount
Snapchat inc.

------
huffmsa
ooo wowww, who _ever_ would have seen this coming?

------
kfkhalili
"Disappearing photos" is a silly concept. Why would anyone buy shares in that?

