
Estimated losses would make Snapchat the most unprofitable social media IPO - ryougazilla
https://sentieo.com/blog/why-snap-will-be-the-most-unprofitable-social-media-ipo-ever/
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kevinpet
This is a lot of analysis to hang on leaked 2014 numbers. It's a rapidly
growing and changing company.

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samnwa
But also a company that shares very little. Snapchat's positioning has always
felt relatively scammy to me. Look forward to some amount of transparency
around traditional metrics either as a result of this suit or through the IPO
process.

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supernovae
Snapchat would be a better company if it wasn't ran by a complete a-hole who
refuses to support anything but iOS..

Facebook will eat their lunch if they don't go cross platform.

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

~~~
lowglow
Facebook does feel like it is dying though.

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

~~~
bkjelden
I don't notice my friends leaving and I feel like it's dying too. The content
just feels so manufactured and empty. About 80% of my news feed is:

1) Friend X liked a photo of someone I've never met and likely never will meet

2) A recipe video that I would never make, or some household 'lifehack' I
would never use.

3) Meaningless images - 'Happy Friday', 'Share if you hate winter', 'Like if
you love Christmas', etc.

Their engagement numbers may still be rising, but it feels like they've
favored pushing up that metric at the cost of having actual quality
engagements. It's all been hollowed out.

~~~
losteric
I'm very curious what their engagement numbers look like when broken down by
region. It feels like FB is drying up in the west, and they're propping up
their numbers by expanding in the east (especially their initiatives in
India).

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throw2016
This could as easily have been titled why X will be the most profitable social
media IPO ever. It reads more like someone is hoping for them to fail and is
grasping for reason to justify this unpleasant emotion.

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

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

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tedsanders
IPOs don't really generate profit for companies. They allow one group of
people to trade equity for cash and a second group of people to make the exact
opposite trade. On net, society is left with exactly the same amount of equity
and cash. If the IPO jumps, it means the sellers lose while the buyers win. If
the IPO falls, it means the sellers win while the buyers lose. In either case,
it's pretty much distributional and zero-sum. I don't understand why this
headline is newsworthy. Profit is not the purpose of IPOs.

(To be clear: IPOs do have purpose. They generate cashflow. And they
diversify/broaden the investor pool.)

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danso
Since Facebook's IPO, which tech unicorns still feel bullish?

Here are the tech IPOs I can think off the top of my head. Maybe it's
selection bias (I only remember the ones that don't look healthy), but this is
what I thought of, and they all are not doing well compared to their IPO
price, or were on a heavy downward trend:

\- Box
[http://finance.yahoo.com/quote/BOX?ltr=1](http://finance.yahoo.com/quote/BOX?ltr=1)

\- Pandora
[http://finance.yahoo.com/quote/P](http://finance.yahoo.com/quote/P)

\- Twitter
[http://finance.yahoo.com/quote/TWTR](http://finance.yahoo.com/quote/TWTR)

\- Tableau
[http://finance.yahoo.com/quote/DATA](http://finance.yahoo.com/quote/DATA)

\- Groupon
[http://finance.yahoo.com/quote/GRPN](http://finance.yahoo.com/quote/GRPN)

\- Twilio
[http://finance.yahoo.com/quote/TWLO](http://finance.yahoo.com/quote/TWLO)
(too short of time to tell, but including it here anyway)

LinkedIn had fallen far from its high until Microsoft bought it:
[http://finance.yahoo.com/quote/LNKD](http://finance.yahoo.com/quote/LNKD)

King (Candy Crush, etc.) was bought by Blizzard but even with the premium it
sold at, it was still about 25% off its IPO:
[http://fortune.com/2015/11/03/activision-blizzard-king-
digit...](http://fortune.com/2015/11/03/activision-blizzard-king-digital/)

Of course there have been other unicorns, less sexy media (including non-
American) darlings that might be doing just fine. And of course Facebook still
looks strong, but FB always seemed like it would do string, at least out of
all the other social networks. I admit that I'm not much of a Snapchat user,
even though many of my friends have migrated over. But does it really have the
same potential as FB to integrate itself into all areas of digital life? Even
if SNAP has strong underlying numbers, it'd be an outlier if it remained
strong 3-5 years from now.

On a sidenote, would love to see an update to this NYT interactive at the time
of Facebook's IPO:
[http://www.nytimes.com/interactive/2012/05/17/business/dealb...](http://www.nytimes.com/interactive/2012/05/17/business/dealbook/how-
the-facebook-offering-compares.html)

edit: added KING (Candy Crush makers)

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maneesh
SHOP (Shopify) is doing pretty well and their upcoming plans/platform seem to
bode well for them.

~~~
automatwon
I didn't even know Shopify was in the unicorn category. I previously worked on
a project that generated coupon codes programmatically for a Spotify shop. I
just closed my testing account a couple days ago, and thought to myself 'wow,
Shopify is still a thing'. No offense, I'm a programmer so I'm completely
ignorant to the value I guess.

~~~
maneesh
For any retailer selling a physical product, Shopify makes it super simple to
list products and connect them with platform apps for fulfillment, marketing,
etc.

My company, Pavlok ([http://pavlok.com](http://pavlok.com)), is built on
Shopify, and it's helped us hook up all our shipping/billing/marketing/payment
services. Shopify is also a really awesome company -- we were one of their
2015 winners of their Build a Business Competition where they flew us to
Necker Island to spend a week with Richard Branson, Tim Ferriss, Seth Godin,
Daymond John, etc. Not many companies make a trip like this happen :)
[https://youtu.be/tmuF1xaW3Z0](https://youtu.be/tmuF1xaW3Z0)

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imaginenore
The $1.05B revenue for 2017 figure is completely made up.

But even if you assume it's real, the $25B valuation still makes zero sense.
25 times the annual revenue, not the profit.

~~~
GordonS
Even more so when you consider the chances of Snapchat still being a thing in
3 years, let alone 25

~~~
argonaut
Three years ago, in college Snapchat was hugely popular. Three years later,
today, it is still hugely popular.

Of course, if you only heard about it on HN/tech sites, you might think
Snapchat is a recently popular phenomenon.

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kedean
Yeah, it's only been getting more and more popular as people realize it
actually fills a real communications niche, and isn't just for sending dirty
pictures.

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

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

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

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robszumski
You are forgetting how geo-targeted it is, from the filters to grouping snaps
about a single event together. You can sell ads for music festivals, concerts,
sports games, informal social gatherings, etc based on where it is and who is
there.

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angryasian
correct this is how their AR filters work, but really any ad network can geo
fence and geo target.

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FT_intern
for employees, it'll be because backloaded RSUs

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stevesun21
When social media get started loading fun part, then, they should think how to
convert into a tool people can use within their daily social activities –
increase user coupling grade.

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CodeSheikh
When you use Snapchat you will notice that most of the top "news" publishers
are the sort of Daily Mail and other tabloids infested with celebrities and
kardashians bogus stories. It does not allow you to curate newsfeed per your
taste. The publishers I want to read/watch/follow are not on Snapchat or I
can't pick and create my selection. Unlike Facebook, where my wall is full
with informational posts catered towards me, by me. This can tell you a lot
about who is paying for advertisements on Snapchat and what type of audience
they are catering to with what kind of content. It reeks desperation.

Edit 1: Grammar

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hbosch
I often find it nearly embarrassing to check my "Stories" section on the bus,
because right there at the top is some sort of sensational headline with an
out-of-context, usually quite risqué photo.

In the recent past, the first few tiles would show some Kardashian sister in a
wet shirt, bathing suit, or less. Just a couple days ago, I want to say, was a
revolting picture of just two large tongues lashing one another... One of the
best parts about my jailbroken iPhone 6 was that I could tweak Snapchat to
hide those (along with the "Featured" Stories below, today in which is a whole
communal story dedicated to _eating pasta_ ).

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CodeSheikh
How did you tweak your Snapchat? Spare me Google research.

~~~
hbosch
On iOS it was Snap++ or Phantom. Both tweaks can hide your Snapchat ads.
Requires an iPhone running iOS < version 10.

