Snap IPO Prices at 17 Dollars a share

Honestly I am just surprised this wasn't posted already. An article on CNBC stated that Snap priced its public offering at $17 dollars a share.

Snap priced its public offering at $17 a share on Wednesday, two sources told CNBC. The company is scheduled to start trading Thursday.

At 200 million shares, Snap will have raised $3.4 billion and will be valued at nearly $24 billion. The IPO is 10 times oversubscribed, the sources said.

Sources had told CNBC earlier this week that investors were expecting a pricing of $17 to $18 per share, above the $14 to $16 per share range originally given by the company.

The pricing reflects what Wall Street's top investment firms think about the stock, and telegraphs how the year's most anticipated IPO might fare in the public market on Thursday.

What do you think about Snaps pricing?

Comments (88)

Mar 1, 2017

I want to buy, but I fail to see how the app can be improved upon. The only way I see Snapchat making more money is by further monetizing snapchat stories, and I don't see what else they could do to improve the app.

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Mar 1, 2017

I agree. While I love facebook, I don't see Snap remaining at the same level as them. I think that they will eventually phase out. However, even if they don't, I have doubts over whether their focus on being a camera company will ever succeed. The Snap spectacles were a surprising hit, but what else can they put out there to keep building their brand?

Mar 3, 2017

I started using Snapchat when I was like 14... 5 years later it's still in my top 3 most used apps. I really think Snapchat is pioneering visual communication unlike Instagram which is just a FB-esque feed of images... call me crazy but I think Snapchat's advertising platform is going to kill it once the 13-year-olds of today actually have independent disposable income to spend on shit they see on Snapchat, instead of having to beg their parents or whatever.

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Mar 2, 2017

'making more money'

it's not making money?

Mar 2, 2017

Posted a net loss of $515M in 2016

Mar 1, 2017

One idea is that perhaps they could embrace the impending VR/AR boom with their spectacles? Google Glass failed but perhaps they can succeed.

Mar 2, 2017

would be kind of cool to "re-live" someone's story.

ex. using VR to experience friend's story from the strip club the previous night.

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Mar 2, 2017

This. What if they partner with media company's to provide exclusive content such as the a 5 minute preview of the latest Game of Thrones episode? Maybe have that in VR where you can sit across from the action in the show?

Take it up a notch and partner with a major player in the adult entertainment industry and provide "exclusive" one-on-one experience via VR?

Just throwing ideas out there...

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Mar 2, 2017

Definitely a good thought. I think there is so much future expectation in this company that I currently do not see the value. I could easily be wrong though so I will be keeping a close eye on how the company develops.

Mar 16, 2017

I honestly think that's one of their only paths to possible success. But even then, it looks bleak. The way that net income figures look doesn't bode well for the R&D that would be necessary to compete with giants like Google and FB who are in position to either do corporate VC or necessary acquisitions. Plus, this would be far far down the line if it happened.

Array

Mar 1, 2017

Over priced.

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Mar 2, 2017

Way overpriced in my opinion. After the first few months of users thinking they want to buy because "they're always on snapchat", Snap will lose all of its hype. People try to compare them to facebook but they forget that facebook had a few years of positive earnings before going public/while Snap does not. Consumers use facebook to log onto various other websites/applications where they profit from this. Snap is hammering too much money into R&D for the spectacles. I feel like its gonna be another twitter/gopro situation.

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Mar 2, 2017

I agree. I don't see how people justify this value. In ten years people will be on to the next idea and Snap will be forgotten.

Mar 2, 2017

I'm going to sound like an old man, but who the heck uses Snapchat? Is that, like, a high school thing or something? I'm aware of zero people in my life that use Snapchat, but it apparently has several hundred million active users.

Mar 2, 2017

Snapchat is huge in high school/college. Esp. High school where kids are addicted to it like Johnny Manziel to coke. Great way to communicate, without the troubles of putting up a convo. Also great way to show off ya junk

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Mar 2, 2017

How old are you? I'm in my mid 20s and never use it. I just don't get it.

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Mar 2, 2017

Also in my mid 20's (2015 college grad) and i use it somewhat frequently. It started getting popular my freshman or sophomore year of college. Probably the primary SM platform for anyone younger than me. I don't really have a good answer why i use it other than everyone else in college was, so you were "missing out" if you weren't on it. I have read some articles where there can be a psychological barrier to posting a photo on IG / FB due to the permanence of it and the fact that their is a public metric for its popularity (Likes).

I'm not saying that SNAP is a good investment, just trying my best to shed some light on why its a pretty popular platform.

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Mar 2, 2017

SNAP is gonna join GPRO, SHAK, and FIT . . . overhyped IPOs that pop on retail buying and then crater. At least in the short/intermediate-term (6-24 months), SNAP seems like an obvious short candidate to me.

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Mar 2, 2017

While I agree that this smells exactly like GPRO, it's not a killer short candidate in my opinion. It's tough to time when the retail buyers go from love to hate & in positions with high costs of carry, that is brutal. Add that to the margin calls & endless short squeezes and you have a 'meh' short candidate.

Lessons learned from my GPRO trades...

Mar 2, 2017

People are buying an IPO of what essentially is an advertising company at P/S of roughly 60, when advertising companies trade in a range of P/S 1-2.

You killed the Greece spread goes up, spread goes down, from Wall Street they all play like a freak, Goldman Sachs 'o beat.

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Mar 2, 2017

Yes, like Google :S

Mar 2, 2017

Lol at "oversubscribed".

Snap's initial range was $20-22... they revised their range down to $14-16. So of course it looks "oversubscribed". All I see is a company that priced 15-25% lower than what they hoped, signalling that the market is in fact cautious about negative cash flow businesses (shocking).

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Mar 2, 2017

Love your point. All most all IPOs are "oversubscribed" at the right price.

Mar 2, 2017

Lets bring up the elephant in the room. Snapchat basically has one product, which can easily be replicated by other social media companies. The biggest, Facebook/Instagram, has already replicated their concept and is launching on most of their platforms (WhatsApp, Instagram, Messenger).

It will be interesting to see how this play out. However, in the real world, David rarely beats Goliath.

Mar 2, 2017

Really disappointed by the lack of any substance hating on SNAP. Back when FB went public, this entire site was extremely bearish, and look how that turned out. Let's try and put away the anti-SV buble bias and compare this objectively what we know about SNAP to FB. This is not an endorsement of investing/shorting SNAP, just trying to compare a similar IPO. I will exclude numbers because we don't really have much to go on right now (though that enough may be a reason to pass):

FB:
- Went public during explosive growth in mobile market, strong headwind
- All competitors including FB did not have a strong mobile ad targeting offering, easier to gain marketshare
- FB established itself in a high value ad business - mobile ad, mobile app downloads, etc.
- Did not have Instagram at the time
- Predictions on low moat (similar to SNAP) - though Plus did seem much weaker then SNAPs competition
- FB's mobile offering were actually weak at the time (Zuckerberg made mobile ad highest priority according to friend at FB, extremely detailed plan that was executed poorly). Would have had to forsee or believe in Zuck's ability to execute
- Able to capture an older demo market, for better or worse, more market share

SNAP:
- Snapchat stories and private messages very popular among hard to reach millennial demo
- Ironically, stories has made private messages less popular, which is easier for Instagram to copycat
- Above raises question if ephemeral messaging/authenticity is really the biggest market, or if its this semi-authentic stories like market, where the posts are public but not overly filtered/polished (this has a lower moat)
- Unlike FB's extensive ad offerings, SNAP's right now are focused mainly on lower cost display banners and skipable ads (I believe at the time FB's desktop offerings were still stronger, so surprising that SNAP's initial market is lower).
- One of FB's main value prop was that the eventually built out a powerful targeting/retargeting ad platform that worked on mobile. As of now, SNAP does not have the same capabilities (but neither did Facebook at IPO)
- Run by a CEO who we don't have enough data on to see if he can execute long term vision (same was said about Zuck)
- Faster revenue growth, lower overall base for revenue (is this true ? now I'm getting conflicting reports).
- SNAP seems to be focusing on media market, buddying up with daily content, based in LA, Sony CEO on board, different then Zuck's vision

After listing all these, I think this investment rests on 3 things:
1. Speigel ability to execute below
2. SNAP ability to expand ad offering to as strong as FB's current offering. Skippable ads will not cut it
3. SNAP ability to do #2 and keep Snapchat stories usable/unique enough to prevent market loss to Insta. This is a bigger risk then FB faced at its IPO

I think its realistic to say Speigel will execute on #2, its a somewhat of a solved engineering problem. If so, I think SNAP demands as high as CPM as FB.

So this really comes down to whether the trend away from what made SNAP originally popular, the PMs, to stories/more traditional type social media gives them a strong enough moat?

And I have no fucking idea about that because I don't use either apps, and I'm sure most on this site don't, so if you really wanna invest if there was some data on stories as % of videos sent, and hours of stories + pms / users for both SNAP and Insta would tip the scale to BUY SELL.

Damn growth stocks suck, way too much uncertainty.

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Mar 2, 2017

You cannot compare snapchat to Facebook just because they are both social media companies. That is not how valuation works. Facebook had completely different financial profile (growth, margins, cash flow, etc.) and unit economics. If you did a side-by-side comparison of their financials as of IPO date and blacked out the company names, you would not think they are comparable.

The biggest concern around snapchat is that it is unprofitable right now and, assuming it doesn't raise more capital, has 4-5 years to get on a path to profitability. If it cannot do that in this time frame, it would have $0 cash left and a near-$0 valuation. In other words, there is nothing sustainable about its current business model.

So the question comes down to: 1) how long do you think Snapchat can reasonably survive and 2) do you believe that snapchat could reach cumulative cash flows of $30bn+ over its lifetime if it is losing $0.5bn per year right now?

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Mar 2, 2017

I find it interesting how many tech companies cannot seem to make money. Take Uber, for example--they have an app that connects willing car owners with passengers, which is simple enough. Yet somehow their fixed costs are so high that they cannot yet turn a profit. Apparently the same thing is true with Snapchat. For goodness sake, you'd think these "cloud companies" had factories and sprawling office spaces in Manhattan to maintain.

Mar 2, 2017

"Facebook had completely different financial profile.."

How do you know that pre-IPO?

Mar 2, 2017

A great analysis is available here: http://aswathdamodaran.blogspot.co.uk/2017/02/a-sn...
Personally, I completely agree with the findings, i.e. it's very likely to be overpriced, but also a stock whose volatility and upside potential are extremely high. Probably most managers are worried of missing out on a potential 10x stock, and this is driving the current price above its real value.

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Mar 4, 2017

Aswath is a fucking G

Mar 2, 2017

I'm an older millenial, and I LOVE snapchat. used to hate on it, but I'm all in now.

as far as valuation, it's been said before, but my wonder is how long this business model can last, where you build a cool social platform, take it public, and hope the ad revenue justifies the valuation. I gotta think there are only so many advertising dollars in the world, and this thing has a ceiling someday

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Mar 2, 2017

What do you love about Snapchat? I'm just curious because despite being in my mid 20s, I just cannot understand it.

Best Response
Mar 2, 2017

I am a highly functioning degenerate. my in laws and parents are facebook/instagram friends with me. it's nice to have one thing that you can maintain your privacy with and be able to share things that don't deserve a fb/insta post with fellow degenerates. this usually includes nights out, golf trips, stuff like that. I don't know that I want my grandma seeing my friend stone cold steve austin 2 tallboys and then happy gilmore a drive at a nice resort, but I know my fraternity brothers would like seeing that.

it's fun being a kid every once in a while, therefore I like snapchat

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Mar 2, 2017

Same here. Approaching 30 and used to shit on it at first but it's genuinely enjoyable. My friends and family are all spread out across the country, and with one app they can send me funny pictures and videos of their daily lives that they wouldn't want posted on instagram/facebook for the world to see. It makes you miss them less, which is awesome.

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Mar 2, 2017

I wonder how many retail investors who que up to buy SNAP will actually know it has never made a profit?

Mar 2, 2017

you assume retail investors look at financial statements...

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Mar 2, 2017

You do?

Mar 2, 2017

Too much is being made of yesterday's price and not enough what the price will be July 31 when most of the lockup periods end. This will be far more telling than the IPO price.

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Mar 2, 2017

Good post.

Mar 2, 2017

I'm seeing it as a short term buy. Long term short until it becomes profitable/loses less money. TBD.

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Mar 2, 2017

no such thing as a long term short. if it goes up, you'll be squeezed until your collateral runs out. shorting doesn't just require you be correct about the company, it requires you to be correct RIGHT NOW

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Mar 2, 2017

Pretty sure that most people who say you should short a stock have never shorted a stock.

Mar 2, 2017

Mark my words, it's gonna be worse than Twitter.

My reasoning is simple: Snap is a platform that is very hard to monetize, without sending away users. Right now, you can check out paid stories and ads, or use some ad filters. That's that. If snap wants to make more money, they need to FORCE those ads on users, which is something all users hate. Furthermore, unlike Facebook, the snap social graph does not span over tens of commercial entities. On Face, you regularly see users participate in promotion campaigns, interacting with companies, etc.

What other steams than ads could they use? I'm not really sure. Facebook is vastly superior for anything related to B2C.

Furthermore, their users are very young. Not the most brand loyal. Can snapchat withstand any turbulence? What happens when someone more secure, less bloated, are "cooler" comes along?

I'm looking forward to see how snapchat turns out in the long game, as I'm a user myself, but it is what it is. An app I use for sending dickpics and hooking up with tinder chicks, and some occasional party pictures I don't want to be seen on FB, or selectively show to people.

Once in a blue moon I check out interesting stories, but that's also something I can do on Instagram.

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Mar 2, 2017

It opened up 40% lmao. I don't care for the company or the long-term profitability potential but I'd sure have subscribed for the IPO shares. The pop was inevitable.

Mar 2, 2017

A select number of people got very rich this morning.

Mar 2, 2017

Fuck my life.

Mar 2, 2017

Not a fan. It isn't even the dominant player in it's own niche.

If you listen to interviews with "influencers" with social media reach, they will all make reference to the fact that Instagram is eating Snap's lunch. Snap's platform simply isn't as lucrative for advertisers. Ultimately, I think Snap will go the way of Twitter -- a useful communication tool for millennials with limited business impact.

A bet on Snapchat is a blind bet on Spiegel.

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Apr 29, 2017

I don't get how Apple hasn't introduced disappearing iMessages? Seems like ability for a text/pic to last only 10 seconds before disappearing is a pretty simple concept for them to introduce.

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Mar 2, 2017

priced at $17 and opened at $24 (now is around $25.5). How does Goldman and Morgan Stanley get it so wrong. Tech stocks consistently produce the so called "pop" so why is that not accounted for? Leaving a lot of money on the table for these companies during the IPO/first batch offered. I don't know how/why the boards put up with it. to be clear: I am not an investor, I don't invest in any company whose products I do not know/own.

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Mar 2, 2017

I don't think they get it wrong, they know how to profit from companies like this.

Mar 2, 2017

they sure do - i bet the prop trading desk made a killing today :)

Mar 2, 2017

guarantee it was intentionally priced that low to keep volume high. if it had priced at the original range, imagine how much lower volume would've been.

also, boards don't give a fuck, MS/GS got their fee. I'd also reckon MS learned their lesson with FB not having a great IPO pop, so they were probably cautious about pricing it high

also, everyone and their mom thinks that these tech unicorns will change the world so they blindly invest. snapchat is sexy.

for comparison's sake, Visa IPO'd in 2008, it was founded in 1958, had killer numbers, and only popped 28% on IPO day. Snapchat has 2 years of history on their s1, had 215mm shares trade hands, and popped 45%. go fucking figure.

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Mar 2, 2017

MS learned their lesson on this one and those who subscribed at $17 had an opportunity to make 50% in a day.
As you said, SNAP is sexy so it's no surprise there was a huge pop. TWTR did 70% at IPO. Now we wait to see if SNAP will follow the same path as FB/Visa or suffer the same fate as TWTR.

Mar 2, 2017
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Mar 2, 2017

I think as far as making money goes, I realize that is the point of business, but with a lot of these tech companies, they seem to take a few years to be in the black. Keep in mind that Snap was founded in late 2011 / 2012

Mar 2, 2017

Mid/late 20s here. Snapchat is great if you're a single man. Boring if you're in a relationship.

Mar 2, 2017

Everyone's a master on Snapchat's valuation nowadays

Absolute truths don't exist... celebrated opinions do.

Mar 2, 2017

Well, considering that the vast majority of people on this board value companies/invest every day, it's not hard to poke holes in a business that's seen their losses grow. There's definitely a positive growth story that can be told, but I have heard literally no one say that they think it's anywhere near its valuation so no one that understands valuation is buying that story.

Mar 2, 2017

I'm not defending it's valuation and wouldn't even think of investing. But there are too many people out here acting like they know snapchat's future.

Honestly, just because you can't see ways of them gaining more revenue sources, doesn't mean there aren't any left. There's a reason why analysts are analysts and entrepreneurs are entrepreneurs.

Absolute truths don't exist... celebrated opinions do.

Mar 2, 2017

34 bn market cap (3x the size of twitter), 25x price to sales (highest of all social media companies), not much growth in the core user base.....

http://www.zerohedge.com/news/2017-03-02/snap-init...
caca, P/E guys celebrating....

Mar 2, 2017

Why P/E? you mean VCs like Benchmark.

It is truly astonishing to have this demand for a stock that offers no protections or elementary shareholders rights.

It is called "thirst trap".

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Mar 7, 2017

Down 12%. Now watch the late IPO buyers scramble to cut losses.

Mar 7, 2017

They should make a filter for when you buy SNAP at $29/share and a few days later its trading for $21.5/share

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Mar 16, 2017

Snap is really crushing it. Crushing the hopes and dreams of millennial investors.

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Apr 27, 2017

In January 2017, The Wall Street Journal reported that "people familiar with the matter" stated that Snap Inc. would share 2.5% of the money raised in an upcoming initial public offering (IPO) with the banks managing the IPO. It also reported that after the predicted March 2017 IPO, the two Snap co-founders would hold over "70% of the voting power" in the company, and own around 45% of the total stock

Snap Inc (NYSE:SNAP), long observed as the principal enormous first sale of stock (IPO) domino to drop in 2017, is currently open. The SNAP stock cost opened at $17.00, however rapidly ascended by 41.2% at the open, shutting on its first day above $24.00 per share. Up until now, the SNAP stock figure is looking splendid.Snapchat, one of the hottest mobile messaging apps, has become a convenient and fun way to send photos and videos to friends and family without eating up your phone's memory. Launched in 2011, Snapchat allows users to add captions, drawings and filters to their photos and videos (also known as "snaps"). Unlike other messaging apps, you can view snaps for a maximum of 10 seconds, and then it's gone for good.Snap, the parent organization of online networking stage Snapchat, saw its stock tumble 9.8 percent Tuesday after a huge rally.The stock fell as much as 13.2 percent prior in the session.

Apr 29, 2017

Overvalued fad.

However, it's probably a good (if not BEST) example of product pivot in human history. dick pics to social network behemoth. must give credit where credit is due.

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Apr 29, 2017
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