Snapchat is a cautionary tale against leaving unicorns for dead | Hacker News Reader

Snapchat is a cautionary tale against leaving unicorns for dead

axios.com

38 pointselsewhen23 comments

Terrible article. Yes it bounced back off of the lows but it’s still not close to profitable and well under the IPO price. Most of the employees got burned and have not recovered.

Well, it isn't news. It's PR.

Link for those who haven't read:

http://www.paulgraham.com/submarine.html

> Yes it bounced back off of the lows but it’s still not close to profitable and well under the IPO price.

The primary concern is long-term survival and growth, not immediately getting to profitable. They have plenty of cash at $2.2 billion.

Last three quarters of gross profit improvement:

$116m -> $172m -> $223m

Gross profit margin for those quarters:

36% -> 44% -> 50%

Operating expenses for those quarters:

$432m -> $477m -> $451m

Meanwhile quarterly sales went from $320m to $446m.

That's exactly what the market wants to see. Their path to ending the losses is extremely clear at this point.

Shouldn’t they have figured out all that BEFORE they went public?

Call me naive, but I’m still of the opinion that a business shouldn’t be business if it can’t sustain itself.

Not necessarily, no.

Biotech companies, as one example, frequently can't sustain themselves when they IPO. They IPO as a means to raise capital to pursue sustainability, to grow the business - develop product etc - using investor money. That's one of the reasons the public markets exist, to expose investors to potential upside.

Tesla is very clearly a business and has lost money every year of its existence.

Amazon lost money for its first seven years, including for several years following its IPO.

Workday and ServiceNow have been money losing businesses for their entire histories. ServiceNow took 15 years to get to profitability in its most recent quarter. They ran losses in the pursuit of faster growth.

Atlassian and Shopify have piled up annual losses for most (all?) of their histories.

Would investors be better off without exposure to Shopify at a $3.x billion market cap at its IPO? It's now $36 billion. Investors get to ride their tremendous business growth (with some obvious risk), which is likely to result in eventual solid profitability.

Most of the companies you named have a product I can name. Workday and ServiceNow both have large enterprise contracts and it’s not easy to move off of them, much easier than Oracle or SAP. I work with both of them are the company I work for has spent millions and will spend millions more.

ServiceNow started as a PaaS and it was hard to sell. Companies didn’t know what to do with it and it wasn’t until they did ITSM (IT Service Management) that it took off. They ate the lunch of their competitors like BMC Remedy.

Snap is just another ad company that can fail quickly of users leave.

A roulette wheel is not a sensible place to invest your money even if it does end up on black.

Snapchat is a cautionary tale about investing in fads.

And it is still ~30% off its all time high shortly after its IPO years ago. Sure it has risen a lot from its lows, but that’s cherry picking dates.

All stocks are below their all-time high almost all of the time. Compare to IPO price instead.

It closed at around $24 at the IPO day... almost 50% off that price. Even worst that I thought

> It went public in early 2017 at $17 per share, sinking below $5 per share by the end of 2018.

Well I guess those who threw their money into "dead stock" at an all time low of $5 at the time, all for it to rise back must have now made a significant gain for now.

Snap is still not profitable just like Lyft, Uber, Blue Apron etc. But instead, this article is a cautionary tale of avoiding buying stocks of unprofitable companies at the IPO price.

We all know their their stock has been doing well this year, but anecdotally (yes, I know, an extremely unreliable metric) it seems that there has been no rebound in usage or coolness factor. I don't hear anyone saying "I've been going back to Snapchat more", neither among personal acquaintances nor on social media or other public channels.

Has anyone? Is their recent growth/rebound limited to any particular demographic or geographical area? Are they just quietly killing it? Are advertisers really being drawn back?

From what I can see in my social circle, after they fixed that horrendous interface update, usage has gone up. This is compounded by people becoming more aware of their social media presence on Instagram. Stories is only part alternative.

It's also very popular for group chats, for which Instagram has no alternative and WhatsApp doesn't have the perceived privacy that Snapchat has.

Unfortunately I don't have any numbers to back this, just my perception.

"[Snapchat] finally mastered Android..."

What is so hard about making an Android app? Where they trying to make a go with some cross-platform toolkit that wasn't quite cutting it?

"significantly increased its revenue-per-user..."

THIS is the part on which I wish they would have elaborated. I'm guessing it's more than selling targeted ads or user info to data mining operations.

You have to support thousands of different devices, most of which are significantly lower spec than iOS devices. Also, the OS is usually running more concurrent processes than iOS, reducing the resources available to your app even more. If you’re doing something resource intensive like a continuously running camera preview with AR effects, these things are likely to cause you some headaches!

Not a very useful article...

Take away: Don't invest in businesses that don't have a solid plan to make money.

If you bought Microsoft stock in 2017 it doubled. If you bought Snap you lost half of it.

What a weird non-article.

Anyone who is investing in Snapchat at this point is doing so purely on stock price speculation. There is no business reason to invest in this company.

Huh. I guess this is what passes as journalism in 2019.

I distinctly remember the moment that I had left Snapchat for dead once it’s share price dropped to 6 or so.

I was considering buying several thousand shares at that time but when doing an analysis on the fundamentals I decided to pass. I could have easily doubled my money and maybe tripled if I had sold at the 52 week high. Oh well. There will be other unicorns.

Can I borrow your crystal ball that tells you where the lows and highs of a stock are please?

If you bought MSFT, AMD, and many other more stable tech companies around the same time as the SNAP IPO, you'd have more than doubled your money by now, too. Did you?

Not at IPO but I did buy both at the beginning of the year.

AMD currently has me at a 94.32% return but MSFT is only at 51.33%. Not bad for the year though.

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