Facebook at the time of IPO in 2012:<p>-= 526 million daily actives (1)<p>-= $1b net cash flow / yr<p>-= Last money in pre-ipo values it at $50b pre-money (2011) (4) when daily actives were 372 million<p>-= $90b market cap after 1st day<p>Snapchat today::<p>-= 100 million daily active users (2)<p>-= ?? net cash flow<p>-= Last money in values it at $15 billion pre (3)<p>- - - - -<p>I understand that's not a perfect proxy to measure value / traction as SnapChat is quick to point out - eg their users watch a lot more video than FB users =- etc<p>So the revenue-per-user metrics may sway.<p>But, at the same token, FB at IPO time didn't have as favorable of a growth market (they handn't figured out mobile yet, where today mobile = all of the things)<p>Will be interesting to see.<p>(1) <a href="http://www.zdnet.com/article/facebook-ipo-final-numbers/" rel="nofollow">http://www.zdnet.com/article/facebook-ipo-final-numbers/</a><p>(2) <a href="http://www.businessinsider.com/snapchat-daily-active-users-2015-5" rel="nofollow">http://www.businessinsider.com/snapchat-daily-active-users-2...</a><p>(3) <a href="http://www.bloomberg.com/news/articles/2015-03-11/alibaba-said-to-plan-snapchat-funding-at-15-billion-valuation" rel="nofollow">http://www.bloomberg.com/news/articles/2015-03-11/alibaba-sa...</a><p>(4) <a href="https://www.crunchbase.com/funding-round/37bd05f961af726ba3c1b279da842805" rel="nofollow">https://www.crunchbase.com/funding-round/37bd05f961af726ba3c...</a><p>(5) <a href="https://tctechcrunch2011.files.wordpress.com/2013/05/facebook-q113-dau.png" rel="nofollow">https://tctechcrunch2011.files.wordpress.com/2013/05/faceboo...</a>
> Spiegel also said he believes there is a tech bubble that will eventually burst.<p>My cynical reading of this is that Snapchat wants to grab as much of retail investors' money before consumer tech valuations implode.
Snapchat reportedly has minimal revenue, and is already discovering that advertisers aren't going to pony up $100 CPMs[1].<p>When Facebook went public, it was already generating more than a billion dollars in revenue a quarter. When Twitter went public, it was generating well over $100 million a quarter.<p>There is no doubt that Snapchat is an important platform and can generate revenue - perhaps significant amounts of it - but it has a long way to go before it can justify a public market valuation anywhere near its current private market valuation.<p>For comparison, Twitter is currently worth about $23 billion and generated more than $400 million in revenue last quarter.<p>Snapchat, in its current state, might be an interesting public market investment at a few billion. Above that, there are much better risk-reward opportunities.<p>[1] <a href="http://recode.net/2015/05/08/snapchat-lowered-its-ad-rates-for-discover/" rel="nofollow">http://recode.net/2015/05/08/snapchat-lowered-its-ad-rates-f...</a>
One could attribute Spiegel's "tech bubble" to the very ecosystem Snapchat is a part of. Consider the current cycle of money:<p>- Venture capital goes into StartupX<p>- StartupX two biggest costs: Infrastructure, Advertising (to varying degrees)<p>- Infrastructure money goes to BigCorpY hosting platform<p>- Advertising money goes to BigCorpY advertising platform<p>- BigCorpY acquires StartupX<p>- Money and BigCorpY stock goes into pockets of StartupX stakeholders<p>In this case, Snapchat spends all its infrastructure dollars on google cloud platform. Even when though Snapchat is not profitable, it still gives millions of dollars per month to Google.<p>(Snapchat, as far as I know, has not spent much on advertising, but some startups do not have that luxury.)<p>How fragile is an ecosystem built around ad dollars funded entirely by venture capital? What happens when Facebook misses earnings due to declining ad spend? Do venture capitalists reduce investment due to lowered expectations of highest possible reward?<p>Is this a house of cards?
Am I the only one here who is impressed with Evan Spiegel + optimistic for Snapchat?<p>Everyone keeps citing the fact that the company is pre-revenue and pre-profits, but FB was too for a while. Snapchat can easily turn on the revenue and profit hose if they so choose to.<p>1.5 ads a day x $20 CPM x 100m DAU x 365 days/year = 1.095B in revenue a year from advertising alone! With Snapchat's explosive growth, we can assume it will eventually hit 200m DAU. That means 2.2b in annual revenue, just from advertising! Add in monetizing things like the discover feature, Snapchat, to even things like local event promotion, and that company can hit in 2.5b<p>The kicker here is that Snapchat can be instantly profitable. 1000 employees will cost at max 100M, and infrastructure costs will only cost a few hundred million. On 2B in revenue, that's insanely profitable.<p>The big question mark is if ads reduce user growth and engagement metrics. However, it seems like Snapchat is a platform uniquely similar to TV, hence I personally don't care when I see a high quality ad or two. Moreover, they are putting a lot of attention to this issue, which is awesome.<p>Just for a comparison, Twitter made 1.4b in annual revenue and has never posted a profit, and is worth 24 billion. If Snapchat makes 2.2b in annual revenue, and got the same P/S ratio, it would be worth 36bn. Not bad to get in at a 15bn valuation if you ask me.
I wrote this here a few weeks ago:<p>Mind you, I've never used it, but Snapchat has 100 Million monthly uniques.<p>I can't think of a single company who has reached a critical-mass consumer audience and not been able to monetize. Sure, winds change, MySpaces rise and fall, but it wasn't a monetization failure.<p>Anecdotally, just a month ago I was walking and because i live in San Francisco I happened across a corner (Howard and New Montgomery) where there were ~20 girls about 13 years old being polled about their tastes, and the questions I heard waiting for my light was "Do you guys like smartphones?" ("yes", duh), "Is your phone more important than your TV?" ("yes", duh), and "What is your favorite app?" and the answer was unanimously Snapchat.<p>Snapchat is the teenagers answer to the question many millennials have fretted about -- "how will ppl born today deal with having all 18 years of their development online". The answer is: they don't put it online. It's peer-to-peer and temporary by social contract, even if the technology is imperfect.<p>So far, snapchat has played a savvy game. As an engineer, if they were based in SF, I'd consider working for them. They have tapped into something. Because my 28 year old wife has also been hooked on Snapchat for what seems like a lifetime now. Her most frequent contacts? Both of her 60+ year old parents, numerous cousins and aunts, etc. Her dad uses it to send stupid pictures that you might not expect from a 65 year old white haired CEO-type whose work is about as far away from tech as you can get.
If something like this happens, it's definitely a sign that a bubble will burst. It's worrying that normal start buying shares from a unicorn with 0 cash flow.
It seems like it's hn's general consensus that snapchat isn't worth that much(or anything), so why would anyone invest in it when it IPO's?
Since this makes absolutely no business sense, you can bet it's being done to cash out investors and shareholders, before the clock runs out on the party.<p>They can raise all the private funding they need, but they can't cash out that way.
This guy sounds like an asshole :S<p>"because it's more fun that way"<p>That's it? that's the reason to stay independent? fun?