It won't matter in the present environment. They'll sell the story, the user growth, the demographics, the revenue potential. It's the same premise supporting Twitter's incredible valuation, which is entirely contrary to its actual business fundamentals.
It'll matter later, when the correction Spiegel is predicting finally arrives.
That's when Snapchat goes from being worth $18 billion in the public market, to being worth $4 billion. This story repeats over, and over, and over, and over again; and every time, half of people are off by years in predicting an imminent correction, and the other half don't think a correction will ever come (or that we're just at the beginning etc).
Do you think every investor is going to read that before considering buying? That's a serious question, as I don't see any reason to have such a great amount of faith considering the previous tech bubble.
No that won't matter, imho, because it's not a value-based investment. It's a growth investment and the only question that needs to be answered is - will the stock go up? An S-1 on a company that has no profits and very few hard assets will tell you very little. But that won't stop investment, because that's not what they're looking for.
Well I would argue if they're positioning it as a growth based investment, that's a huge red flag to you, the potential investor. But of course, some people will believe in their story.
It would only be a red flag if I was a value-based investor. Warren Buffet won't be there in other words. But if revenue, profit, earnings, and assets were the only metrics used for investment the stock market would be tiny compared to where it is today.
They were offered three billion dollars that they turned down. That is the best offer they will ever receive, and they fucked it up.
They fucked up big time.
The value of a company pre-IPO is what someone (or relatively few people) is willing to pay to acquire you. The value of a company post-IPO is essentially how much your shares are selling for. The prices of your shares are largely dictated by the opinion of a much larger number of people.
Come on. Even if snapchat rapidly declines I am guessing Spiegel is going to end up doing alright. Why not go for it like Zuckerberg did instead of selling?
Can't succeed if you don't try. Good for the founders for deciding to run with it.
Oh surely he will be fine. You would be a fool if you did as well as they did now, and ended up in really dire straights on a personal level.
Having said that, I agree. It was likely a huge mistake to turn that down. FB has whats app, and there is now so much competition in this space its uncanny. From iMessages, to FB Messenger, to Whats App, and smaller players like Kik, it seems like a congested market.
That's what people said about Facebook in 2006 when they turned down the Yahoo offer. I predict Snapchat is going to be a dominant player in mobile advertising, like Facebook and Google. I wish I could invest in it now, even at this high valuation. Also extremely bullish on Tinder and Pinterest.
You can own/invest in Tinder (ish - I say ish because you'd have to invest in a bigger company). It's owned by Match.com, which is owned by IAC ($IACI).
Comments
"We need to cash out before investors realize we have little value."
But they will realize if they have value or not when they read the S1 filing required to IPO.
It won't matter in the present environment. They'll sell the story, the user growth, the demographics, the revenue potential. It's the same premise supporting Twitter's incredible valuation, which is entirely contrary to its actual business fundamentals.
It'll matter later, when the correction Spiegel is predicting finally arrives.
That's when Snapchat goes from being worth $18 billion in the public market, to being worth $4 billion. This story repeats over, and over, and over, and over again; and every time, half of people are off by years in predicting an imminent correction, and the other half don't think a correction will ever come (or that we're just at the beginning etc).
Do you think every investor is going to read that before considering buying? That's a serious question, as I don't see any reason to have such a great amount of faith considering the previous tech bubble.
No that won't matter, imho, because it's not a value-based investment. It's a growth investment and the only question that needs to be answered is - will the stock go up? An S-1 on a company that has no profits and very few hard assets will tell you very little. But that won't stop investment, because that's not what they're looking for.
Well I would argue if they're positioning it as a growth based investment, that's a huge red flag to you, the potential investor. But of course, some people will believe in their story.
It would only be a red flag if I was a value-based investor. Warren Buffet won't be there in other words. But if revenue, profit, earnings, and assets were the only metrics used for investment the stock market would be tiny compared to where it is today.
They were offered three billion dollars that they turned down. That is the best offer they will ever receive, and they fucked it up.
They fucked up big time.
The value of a company pre-IPO is what someone (or relatively few people) is willing to pay to acquire you. The value of a company post-IPO is essentially how much your shares are selling for. The prices of your shares are largely dictated by the opinion of a much larger number of people.
Come on. Even if snapchat rapidly declines I am guessing Spiegel is going to end up doing alright. Why not go for it like Zuckerberg did instead of selling?
Can't succeed if you don't try. Good for the founders for deciding to run with it.
Oh surely he will be fine. You would be a fool if you did as well as they did now, and ended up in really dire straights on a personal level.
Having said that, I agree. It was likely a huge mistake to turn that down. FB has whats app, and there is now so much competition in this space its uncanny. From iMessages, to FB Messenger, to Whats App, and smaller players like Kik, it seems like a congested market.
You can do both--sell your revenue-less startup for billions and then start a real business with a portion of your fortune.
They fucked up big time.
That's what people said about Facebook in 2006 when they turned down the Yahoo offer. I predict Snapchat is going to be a dominant player in mobile advertising, like Facebook and Google. I wish I could invest in it now, even at this high valuation. Also extremely bullish on Tinder and Pinterest.
You can own/invest in Tinder (ish - I say ish because you'd have to invest in a bigger company). It's owned by Match.com, which is owned by IAC ($IACI).
That's called balls.