This IPO is going to wipe out the unicorn bubble. The valuations for this company are utterly delusional.
It's being pumped on all the investment forums by people who seem to honestly believe that the embarrassingly dorky Spectacles are going to be the next iPhone, even though investors seem to be the only people who have even heard of the thing.
This IPO is going to tank.
Why do you think it's overvalued? And pets.com was in a fundamentally different situation. So fundamentally different that you might as well compare it to Enron.
I think that you are overestimating the speed at which the stock market corrects itself esp when it comes to tech. Look at Twitter. It's technically dying but it wasn't a fast death.
If we compare Snap to Ford (bear with me), we're looking at 40% the market cap (20bil vs 50bil) and .3% the revenues (400mil vs. 150bil).
Snap is definitely a valuable company with a lot of future prospects, but is it worth 20bil? Tech companies are extremely young animals and their valuations have yet to reach the accuracy of more established industries. This looks like a classic case of FOMA from investors.
The correction, in theory, should be faster this time around as we've already gained insights from Twitter.
And therein lies a wildly inept understanding of Snapchat that is so common among people outside of its main demographic.
Yes, but this new way requires the target to physically engage with the ad. The sponsored filters allow quite a bit of personalization, which seems to be something young people want more of. Not really a heavy Snapchat user, but I think it's helpful to think of them as an advertising platform instead of a disappearing photo company.
I do, however, share your "who cares" gut reaction to all of this.
It's something I've always wondered about with the movie industry and it obviously seems to be the groupthink across the board about young kids.
If an advertiser can reach you during that time and convince you to change behaviors, they've locked in a lifetime pattern. Pretty much everyone, for all but the few things they care about, once they form a habit, will continue on that habit until some event is big enough to jolt them out of it. Once you've decided what kind of cereal you eat and shoes you wear and car you buy, it's exceedingly hard for advertisers to reach you and change your mind.
That's why 18-35 is such an important demo for advertisers.
I'm a fan.
Well isn't that a problem if people outside of its main demographic with "wildly inept understanding" of the company might be the same people you hope to sell shares to? The kids aren't the ones that will be buying the stock.
Though I bet the fact that so many financial types love Twitter could be resulting in Twitter getting more love than it should on the markets (even now), I don't think the inverse happens.
Instagram users sparsely update and check their feeds. Snapchat is much more rapid, and users tend to post much more content though out the day.
I'm somewhat reminded of when Drew Houston launched Dropbox and showed it to HN. https://news.ycombinator.com/item?id=8863 The comments are somewhat dismissive.
Pets.com was insanity. It IPOed 15 months after it was founded and had no fundamentals of any kind. Snap is 6 years old and has hundreds of millions of retained users.
From the wikipedia page for Pets.com:
Despite its success in building brand recognition, it was uncertain whether a substantial market niche existed for Pets.com.[5] No independent market research preceded the launch of Pets.com.[5] During its first fiscal year (February to September 1999) Pets.com earned revenues of $619,000, yet spent $11.8 million on advertising.[5] Pets.com lacked a workable business plan and lost money on nearly every sale because, even before the cost of advertising, it was selling merchandise for approximately one-third the price it paid to obtain the products.[5]
> Snap is 6 years old and has hundreds of millions of users.
When you say fundamentals, that usually goes hand in hand with a business model that will promote profitability, which Snap has been unable to prove.
EDIT: They incurred a net loss of $514.6 million ending 2016. That is not a sound business.