This is a cashout. They implemented their "new" features and can see that no revenue/profit is going to be made from their platform. There's an impending cliff they're about to drop off, shareholders are getting paid and jumping out before it buckles under it's own pressure.
Anyone want to make a bet? I say within 6 months they'll be agreed to be acquired for cash/stocks. The only other option is to start acquiring other companies, but that's too risky long-term for investors.
"Snapchat has peaked" or "snapchat is doomed" are each consistent with independence in a lot of cases. "Snapchat can IPO" as well as "undefined" are also.
The only case I can see for "Snapchat in a quick sale" is if there were a strong #2 from FB, Twitter, Google, Microsoft and another of them bought Snapchat as the competitor. As it is, I don't think it's a direct competitor to Twitter/FB core business, so they're not forced to buy it right now.
Add me to that bet (I am betting that Snapchat stay's independent), so another $1,000. @Mandatum whats your email, let's put the money into a Bitcoin escrow, I'll set everything up, to be payed on February 27, 2015.
silly question, is there a (known) web site for making (small) bets among individuals, keeping escrow, doing odds etc? I thought about this as a 'startup' idea but I'm scared of the laws, esp. US law
No, if they wanted to cash out, they could sell more. Go search home screen on Twitter, you'll see it's installed by as many young kids as Facebook (in some cases more). Monetization isn't easy here, but it is totally feasible with an audience like this.
Tweens are also extremely nomadic when it comes to apps. They'll drop snapchat like a bad habit over the next couple years as the new thing comes along.
Facebook and Instagram usage would say otherwise - they're still there. Yes, apps can get dropped, but how ingrained it is in their life is not to be understated.
I'll also bet they are independent. But my typical bet size is $100. Interviews with Evan Spiegel imply he believes he has the opportunity to build the next great thing. And I believe him. Snapchat is a fantastic product and idea. I would invest at this "overvalued" level.
I don't perceive Snapchat as the next great thing but I'd love to hear why you do. Really and truly -- I thought they were bonkers for not taking FB's offer, but I'm open to hearing why they aren't.
Would you do me the favor of explicating? How can I make your explaining this to me worth your while?
If what I've witnessed is any indication of a bigger picture, Snapchat's userbase is slowly shrinking. The appeal of expiring messages was once pretty great, but I can't honestly remember the last time I sent a Snapchat and I receive maybe a couple a week now. A few months ago it wouldn't be uncommon to receive between 6 to 12 Snapchats per day. Like all gimmicks, people grow tired and move onto the next big thing or not at all. There is only one application in the image sharing space that has remained dominant, growing quite linearly and strong and that is Instagram.
Maybe it's just my friends that have stopped caring about Snapchat and it would be interesting to see if anyone else here has noticed similar behaviour of waning interest amongst friends and colleagues and the use of Snapchat.
We all know unless Snapchat pivot the app and make it appealing again, it will only to continue to witness decline. Look to Foursquare for some great parallels, at its peak, everyone was using it at one stage and then people lost interest. The fact they had to open up yet another app got tiring and eventually people gave up. They're entering dangerous territory, it would be best for them to, tread lightly.
I'm 26, so not sure if that is considered fairly young or "over the hill" haha. Maybe some subset of users are still using it quite regularly and my friends/family have all stopped because of some kind of chain reaction.
I just can't take seriously any VC valuing this company at $10 billion, and I'd be furious about this if I had money invested with any of the firms involved. According to Forbes[1] they have 100 million users. That seems high, but even if that's the case...since when is an app worth $100/user? Even Whatsapp didn't get that on a per-user basis.
Right, I know how you feel. This is how the Digital Sky Technologies LP's must feel about them investing in FB at 15B...good for you that you weren't part of that fund - they are definitely not serious VC's.
I am saying that valuing a company at a value $10B or $100B it's not outrageous in any way. You said you cannot take seriously any VC that values a company above $10B implying that no company can go above $10B or that they are somehow insane to think that could happen.
This is simply no outrageous in any way and it was likely a very competed investment - I do think that Snapchat can achieve a value much larger than $10B or even $20B. Outrageous I would say is $1 trillion.
>"You said you cannot take seriously any VC that values a company above $10B implying that no company can go above $10B or that they are somehow insane to think that could happen."
I said nothing of the sort. I said that Snapchat is not worth $10 billion and likely never will be. For reference, my exact words were:
"I just can't take seriously any VC valuing this company at $10 billion"
They don't. They invest with liquidation preferences and hidden dividends payable at liquidity. It's the press that assumes that preferred stock == common stock.
I think most people who invest in these things take future/potential growth into account. Also, it can be argued that consumer web investments have been working on the greater fool theory for the past decade: http://en.wikipedia.org/wiki/Greater_fool_theory. This is still relatively early for comparable hyper-growth consumer web or mobile consumer app company. If you're able to get your money in this round, you're likely going to see a good return.
Not saying I necessarily agree with the investment, but this is just how things have been lately.
What a huge valuation! I get that Snapchat has a huge amount of users, but can that really be turned into cash? Snapchat doesn't know much about users (personal interests, personal details etc) so I can't see advertisers being too interested with "targeted" advertising being so current.
can they get to IPO at even higher valuation? can they get revenue to support that or even higher valuation? both - probably not, and it isn't really important as long as they can get a next, bigger, round of financing at even higher valuation. IPO of 2000 is the C-round of 201x - ie. the time to cash and let the next ones to hold the bug. And it is good as it shows that there is a lot of liquidity out there and it attracts the liquidity into hi-tech thus paying our salaries.
can you clarify what you mean by in the red? presumably a lot of their expenses are related to R&D and marketing, which once cut would probably leave a profitable company.
I mean that they (still) aren't making any money. The reports of Q1 profits this year are with a criticized, adjusted scale. When measuring with GAAP, as companies have been traditionally measured, they still posted a loss.
Indeed, much of their expenses are for trying to grow as fast as possible, and cutting those could leave the potential for profit - but the entire premise of companies like this is that the potential earnings are unknown (but presumably high), thus they need to throw everything they have at it until they can find the kind of monetization they're looking for. I don't see it happening.
The main semi-targeted advertising Snapchat is experimenting with right now is based on location: http://www.theverge.com/2014/7/15/5901359/snapchats-new-geof..., and location information is pretty huge when it comes to advertising. That article states that such filters are currently unpaid, but I think that could change easily.
EDIT: Additionally, their rumored "news network" (http://www.theverge.com/2014/8/20/6049007/snapchat-discovery... b/c the original article is paywalled) is said to have advertising as well. No mention on how/if it's going to be targeted, but I wouldn't be surprised if they come up with something interesting.
> so I can't see advertisers being too interested with "targeted" advertising being so current
Gary Vaynerchuck had an interesting point in one of his many many interviews. Basically SnapChat is instant focus, you cannot see an ad and file it away for later, you must act on it before it disappears. That functionality may be important to some advertisers.
Me I joined SnapChat and have never received one naked selfie so I never use the app. I guess that use for it created a lot of the user base. I do not know how much I would value the app because of that and how scalable their user base is, and their tech is easily replicated.
This is the question that's asked every time Snapchat's valuation comes up, and as far as I know nobody has ever given a truly satisfactory answer that isn't extremely speculative.
that is just new generation of business - like Google installed CPU farms Snapchat needs to do the same, only with GPU farms. Tangentially, it is interesting that Google is lagging with GPU - they are previous generation and just don't see the place for it in their business which is text based. New generation obviously going to be image based. FB is in between - they still have chance, yet start to lag behind.
They may not little about their users now, but this valuation could well be based on the (reasonable) expectation that they will know more in the future.
Anyone want to make a bet? I say within 6 months they'll be agreed to be acquired for cash/stocks. The only other option is to start acquiring other companies, but that's too risky long-term for investors.