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Snap Inc. S-1 (sec.gov)
465 points by harryh on Feb 2, 2017 | hide | past | web | favorite | 311 comments

"We have incurred operating losses in the past, expect to incur operating losses in the future, and may never achieve or maintain profitability." haha

This is boilerplate S1 language.

Unless I mean, you're profitable

I know 'burn the heretic' haha its just a concept

May I ask why? What would companies get out of doing that?

There are a lot of laws and regulations around advertising stock for sale to the general public (as opposed to qualified private investors).

Companies have to be very conservative but thorough in the "Risk Factors" section, or get sued by investors claiming to have been misled later.

For example some of Google's Risk Factors from 2004:

> New technologies could block our ads, which would harm our business.

> We generate our revenue almost entirely from advertising, and the reduction in spending by or loss of advertisers could seriously harm our business.

> We are susceptible to index spammers who could harm the integrity of our web search results.

I imagine it's a legal disclaimer. Same reason every investing prospectus in existence says "Past performance is not a guarantee of future returns"

Are there legal implications if you use language like "we _hope_ to get to a profitable stage within one year"?

It's more that there are no upsides (saying "hope to" doesn't sound very certain, so no one is going to increase the price they'll pay for your IPO shares) and there are downsides if you don't become profitable within a year, once you've said you hope / intend to. So, the bottom-line incentives are not to say it.

It's not like they could claim anything else. No company can guarantee that it will remain profitable.

"There's a sucker born every minute" didn't enter the American lexicon by accident, mind you.

It's great to see both founders ( Evan and Bobby ) ended out with equal shares, both at 21.8% of Common A Stock. The history is pretty interesting, and as always there is a possible 3rd founder. https://techcrunch.com/2013/07/31/spiegel-murphy-say-alleged...

Why is it great? It seems a super low probability that both founders deserve exactly the same compensation.

Spiegel gets an extra 3% for the IPO.

> For the year ended December 31, 2016, we recorded revenue of $404.5 million... For the year ended December 31, 2016, we incurred a net loss of $514.6 million

> We have three classes of common stock: Class A, Class B, and Class C. Holders of our Class A common stock—the only class of stock being sold in this offering—are entitled to no vote on matters submitted to our stockholders

Is the monthly revenue growth rate in there? I can't find it. To me that tells the story of whether it's a buy or not (for the mid term).

Small question, but is it normal to leave the numbers blank when it comes to share-percentage or number of shares rewarded to the founders in the Risks section[0]?

[0]: https://www.sec.gov/Archives/edgar/data/1564408/000119312517...

"We are required to purchase at least $400M of cloud services from Google each year beginning on January 30, 2017..."

Wow, quite a snag for Google Cloud Platform to land that contract!

OK, their dirty laundry is about what I would expect it to be. They are required to list these things at this point to avoid being accused of hiding information later.

Given all this, are you buying? If you owned stock day 1 would you sell it?

Personally, I'd sell immediately. I don't trust tech stocks; they're consumer discretionaries (or media stocks?) but more volatile, and any one of them could suffer the fate of Sun or Iomega at any time. If you gamble and win, you can make a fortune, but if you gamble you're more likely to lose; there are more reliable profits to be made elsewhere.

(But I don't short any tech stocks, even though they don't normally pay dividends; all you have to do is short the next Microsoft once, and then you're selling your house a decade down the line. I prefer to let other people do the gambling, in both directions, while I look for safer things. Similarly, I have no exposure to biotech, the other gambling part of the market.)

> We rely on Google Cloud for the vast majority of our computing, storage, bandwidth, and other services. Any disruption of or interference with our use of the Google Cloud operation would negatively affect our operations and seriously harm our business.

Over-under on how much of their cost of revenue goes to Google App Engine?

"The launch of Spectacles, which has not generated significant revenue for us, is a good example. There is no guarantee that investing in new lines of business, new products, and other initiatives will succeed. If we do not successfully develop new approaches to monetization, we may not be able to maintain or grow our revenue as anticipated or recover any associated development costs, and our business could be seriously harmed."

I don't think anyone expected Spectacles to be a cash cow, but I still would have expected a more positive outlook on them.

They're probably more of a shot at creating lock-in than a profit center.

They certainly are, you flat out cannot use Spectacles without opening the Snapchat app.

What's up with the massive negative gross margins? Will wall street glance over those? Is there any precedent for a company going public with such upside down financials (putting growth aside)?

Serious question: how does Snapchat spend so much money on infrastructure? How could the app run up a $2b Google Cloud tab? Would anyone care to break it down?

My guess would be the huge compute power needed to transcode that much video.

and storage, i'm guessing

video transcoding wouldn't it be better on FPGA or some DSP? and storage - compression? I mean are all those images that different from each other? Different people make photos and videos of basically the same stuff.


At that scale (160M active users [0]) I guess they could easily develop and run their own infrastructure. $2bn just screams 'inefficient implementation' to me... I could be wrong though.

[0] https://techcrunch.com/2017/02/02/snap-ipo/

If I am the May 2016 investor, I'm thrilled that I got to see how the company grew for a year and a half, while still paying the same price as the Feb 2015 investor. Snap might have provided other incentives to investors early in the Series F round, or they were just happy to get invited to the party.

It doesnt make sense that it would be worth more than twitter or even instagram. Even if ads are more effective, there's 5x the interest to advertise on those platforms than snap (https://www.google.com/trends/explore?q=snapchat%20ads,twitt...). I say its worth more like ~3B market cap

Part of this can be explained by Snapchat not having a self serve product (AFAIK) so a lot of the search results might be individuals/smaller businesses looking for help/advice to get started. I know the major brands are spending fairly significantly on Snapchat and doubt they contribute much to the Google trends data.

So what's the transition time from an S-1 to being able to buy shares. Does it mean the stock will list tomorrow?

A month or two. I'd wager 6 weeks.

The S-1 is for the roadshow to create the underwriters and syndicate. They want to study our reactions and other people's reactions to see how they can price the shares.

It is all about perception at this point. Share value number should go up.

Snap Inc. is a camera company.

Still don't use the native camera on Android.

You don't understand. They're a camera company.

Like, making actual cameras? I don't use Snapchat, but would that just be a regular camera with filters?

They have "made" cameras before, one was a pair of sunglasses iirc.

But still. Make that your slogan?

See Spectacles (and whatever else they have in store)

> For the year ended December 31, 2016, we incurred a net loss of $514.6 million, as compared to a net loss of $372.9 million for the year ended December 31, 2015. Some serious progress there. Great. Let's IPO O_o

gotta strike while the iron is hot

Net loss about 500 million at the end of 2016 which is about 100 million more than the year prior. Yikes. Still they'll likely make the case that they can turn a profit in the not-to-distant future.

It s going to be tremenous success. I ve never even seen the app, let alone used it, but its the times we live in.

I wonder if Snapchat is still using AppEngine. I'm pretty sure they were 50%+ of the AE traffic at some point.

I know googlers used to needle the AE SREs by calling them "Snapchat SREs"

Fate will be similar to the Twitter stock

Your pension funds at work, people.

When are they going to be on Nasdaq? I'm not sure where to find this info.

Never. They're on the NYSE.

Oh, I see. And when are they expected to enter the market?

They plan for sometime in March.

I'll never complain about writing a SOW ever again.

Snap is a company that doesn't know Oneself.

What a shit design of this page.

I know - it's fully searchable, everything easily accessible. What were they thinking?

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