Slashdot Mirror
Instant Messaging App Snapchat-Maker Snap's IPO Opened Trading At $24 a Share, Making the Company Worth $33 Billion (recode.net)
Snap, the company behind instant messaging app Snapchat, went public this morning at price that values the loss-making tech company at $33 billion. Here's how the investors are valuing the company: At $33 billion, investors are saying Snap is worth 35 times what it's estimated to generate in sales this year, or about $936 million, according to eMarketer. Compare that with Facebook, which is currently worth about 10.5 times its estimated 2017 revenue. In other words, investors, for the moment, think Snap has three times more potential value than Facebook. That's a big bet. Snap lost $514 million last year on $404 million in revenue. Compare that with Twitter, which lost $79 million the year before its IPO, while Facebook made $1 billion in profit. Snap has 158 million daily active users. Facebook at its IPO had 845 million monthly active users and 483 million daily active users.
Social media operators are not technology companies. They are advertising agencies and marketing data processors. Your understanding of technology is not going to help you assess the worth of these companies or the risk of investing in them.
If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...
Twitter is currently trading within two dollars of its 52 week low as concerns mount that it may not ever be profitable. I don't use Snapchat. I have nothing against it, but I have no use for it. I have read recently that all of their competitors do everything that Snapchat does, but they all do it better. Snapchat was just there first. I'm sure that some people will make money on this stock. Those who got in close to the IPO opening price may have already sold it off for a profit. The investment bank that backed the IPO certainly has already made a ton from today's market action. But this is the same market with the same investors who kept SCO alive for years at almost $5 a share in the hopes that it would win its lawsuit so I won't be surprised if Snapchat eventually dies and many of those investors end up taking big losses on it.