Thursday, March 2, 2017

Snap Chat at 25 (update)


I don't use SnapChat -- to be perfectly honest I don't really know what SnapChat is about considering that the whole thing is that you seem to be able to send inappropriate pictures that will disappear into the ether immediately (really).  Honestly, what's to stop a person who receives a snapchat from taking a picture and then posting it on...

Maybe the new generation has figures out that your Facebook pictures of you snogging some girl could come to haunt you many years later.  A suggestion, if you think the picture is inappropriate maybe it's best not to send it all!

Anyway, this morning SnapChat was launched on the NYSE with a price of about $17 per share, a nice one day boost of 47% to $25.16 this afternoon made everyone that got allocation in the IPO- happy.

Also this morning the market gave a target price of $10...mmmmh.

I've not looked at the annual report but something tells me that with a company that was valued at US$ 29 billion and is now worth US$42 billion is somewhat overpriced.  I am curious as to their revenue model.  I got Google and Facebook wrong, Google's prime money maker Google Adsense didn't exist at the time of the IPO -- so again it was a leap of faith on the part of the investors.

Apparently in 2016 Snapchat made revenues of US$ 400 million -- so a company with revenues of 400 million (and I would guess expenses greater than that-- Turns out that net income was -514 million) has a US$ 42 billion market cap.

I just found out that the company raised US$ 3.4 billion -- on a launch market cap of 29 billion.  I don't know if that includes the greenshoe option -- my guess is that it does since that would explain the nearly 12% of shares issues.

Not that the market gives a damn about my views -- after all even with a 29 billion market cap, and 400 million in revenues -- this is all about the future revenue growth.

No position (or appetite) for Facebook, Google or Snapchat


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