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Author Topic: Is SNAP the next Twitter?  (Read 417 times)

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je100

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Is SNAP the next Twitter?
« on: May 10, 2017, 03:18:06 pm »

I personally wouldn't touch this with a ten-foot pole.  Looks like the next Twitter to me.

http://www.cnbc.com/2017/05/10/snap-earnings-report-q1-2017.html
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je100

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Re: Is SNAP the next Twitter?
« Reply #1 on: May 10, 2017, 03:19:28 pm »

I personally wouldn't touch this stock with a ten-foot pole (which could mean it belongs in your portfolio).  Looks like the next Twitter to me.

http://www.cnbc.com/2017/05/10/snap-earnings-report-q1-2017.html
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Vantage 8 dude

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Re: Is SNAP the next Twitter?
« Reply #2 on: May 10, 2017, 08:34:21 pm »

I personally wouldn't touch this with a ten-foot pole.  Looks like the next Twitter to me.

http://www.cnbc.com/2017/05/10/snap-earnings-report-q1-2017.html
Totally agree!
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je100

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Re: Is SNAP the next Twitter?
« Reply #3 on: May 11, 2017, 09:48:21 am »

After sleeping on it, and watching SNAP give up 20% last night, SNAP may be a worse investment than Twitter.  Gartman goes on a funny rant.....

"This is a company losing millions of dollars/month, whose product is the ability to create funny pictures of friends that can be sent via the net and messages that disappear soon after having been transmitted.
 
This is utter nonsense; This is not a business… this is a time sapping hobby; a diversion; a silly little waste of aggregated time that could be spent “profitably” but which is spent stupidly instead.
 
Although we know that teenagers… and adults who think of themselves as teenagers… love this silly little “app,” but it is simply an app… and a silly one at that.


http://www.zerohedge.com/news/2017-05-11/dennis-gartman-snaps-epic-rant-against-snapchat
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widespreadsooie

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Re: Is SNAP the next Twitter?
« Reply #4 on: May 11, 2017, 12:27:34 pm »

After sleeping on it, and watching SNAP give up 20% last night, SNAP may be a worse investment than Twitter.  Gartman goes on a funny rant.....

"This is a company losing millions of dollars/month, whose product is the ability to create funny pictures of friends that can be sent via the net and messages that disappear soon after having been transmitted.
 
This is utter nonsense; This is not a business… this is a time sapping hobby; a diversion; a silly little waste of aggregated time that could be spent “profitably” but which is spent stupidly instead.
 
Although we know that teenagers… and adults who think of themselves as teenagers… love this silly little “app,” but it is simply an app… and a silly one at that.


http://www.zerohedge.com/news/2017-05-11/dennis-gartman-snaps-epic-rant-against-snapchat

I was under the impression that SNAP was going to begin to gear more towards news delivery, among other things. They're already doing this on what I would call a very basic level. Their platform for it is the first of its kind. Enough traffic would open up opportunities for advertising income. I wouldn't buy it, hot shot tech start ups tend to have ego but I could see it bouncing back when the price is right and their development picks up. 
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Vantage 8 dude

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Re: Is SNAP the next Twitter?
« Reply #5 on: May 11, 2017, 04:55:20 pm »

Here's another thought: How about waiting a while to see if SNAP can actually end up making money? It never ceases to amaze me all the folks who feel they just have to buy some IPO (or even not long after the initial trading). I honestly can't tell you how many times I heard a client say something like: "If I had just had the chance to buy Wal*Mart when it first came out in the 70s I could have been a millionaire. Well duh, even for folks who didn't and ended up purchasing the stock 10 or 15 years later the vast majority still made an incredible ton of money.

In my own case I purchased a couple hundred shares of Apple back 7 or 8 years ago-long after the stock first went public. With the splits and run the stock has had (and likely will continue to) anyone want to guess how that initial investment has done? I mention this not to brag or say "hey, look at me". Rather, I relay this to illustrate that NOT being in at the very beginning doesn't doom you to not being able to capitalize on potential great returns still ahead. And one other thing being a little cautious on and IPO can do is to hopefully help you from "blowing yourself up" in the event that the "next best thing since sliced bread" really isn't. Remember Warren Buffett's two most important words of advice when it comes to investing: First, try not to lose money and secondly, don't forget rule #1.
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McKdaddy

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Re: Is SNAP the next Twitter?
« Reply #6 on: May 13, 2017, 10:53:38 am »

Here's another thought: How about waiting a while to see if SNAP can actually end up making money? It never ceases to amaze me all the folks who feel they just have to buy some IPO (or even not long after the initial trading). I honestly can't tell you how many times I heard a client say something like: "If I had just had the chance to buy Wal*Mart when it first came out in the 70s I could have been a millionaire. Well duh, even for folks who didn't and ended up purchasing the stock 10 or 15 years later the vast majority still made an incredible ton of money.

In my own case I purchased a couple hundred shares of Apple back 7 or 8 years ago-long after the stock first went public. With the splits and run the stock has had (and likely will continue to) anyone want to guess how that initial investment has done? I mention this not to brag or say "hey, look at me". Rather, I relay this to illustrate that NOT being in at the very beginning doesn't doom you to not being able to capitalize on potential great returns still ahead. And one other thing being a little cautious on and IPO can do is to hopefully help you from "blowing yourself up" in the event that the "next best thing since sliced bread" really isn't. Remember Warren Buffett's two most important words of advice when it comes to investing: First, try not to lose money and secondly, don't forget rule #1.

Agreed. I had 2 young clients buy Snap....they wouldn't be talked out of it.
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hawkhawg

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Re: Is SNAP the next Twitter?
« Reply #7 on: May 13, 2017, 01:49:55 pm »

I work in education. I'll tell you that all these kids use is snap. They use it instead of texting. They don't use Facebook or twitter. Snap is the way they communicate.
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Vantage 8 dude

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Re: Is SNAP the next Twitter?
« Reply #8 on: May 13, 2017, 06:02:30 pm »

I work in education. I'll tell you that all these kids use is snap. They use it instead of texting. They don't use Facebook or twitter. Snap is the way they communicate.
Perhaps, the problem for SNAP is how do they ACTUALLY MAKE MONEY with advertising and such? In the end a company, any company has to find a way to turn it's product/users into actual positive cash flow generators and profits.

Ran across an article concerning this exact issue and company written by a guy named Keith Fitz-Gerald. He runs an investment service and writes an publication called Total Wealth. In it he relates a conversation he recently had with his fifteen year old son and best friend who were discussing their use of Snap Chat. Keith asked them to recall a single variable that will translate into actual money for the company such as no business value, branding retention so that advertisers could actually monetize their fees to SNAP, or much of anything else for that matter. In fact, according to a digital strategy expert with more than twenty years of experience who's worked with some of the biggest, most success companies in the space cited by Fitz-Gerald: "Snap's business model is a joke because there is no business model that will allow the company to sustain the platform with sufficient revenue to run it".

Perhaps that's one of several reasons why the company lost $2.2 BILLION during the first 90 days as a public company. That takes talent-sarcasm fully intended. It will likely lose gobs of money in the months ahead. BTW CFO Drew Vallero said during an analyst conference call that the company is "still in investment mode" which often can be interpreted as Wall Street speak for "We still expect gullible investors to buy our stock".

And one crucial metric that anyone would want to see is heading south. That's the glaring fact that user growth is actually decelerating.

Fitz-Gerald further points out that in the past most companies who issued an IPO did so that they could raise additional capital to grow already growing, viable businesses. Now most companies go public because they hope to "monetize". More often than not, they're huge money losers hoping to cash out on your dime.

Back then, going public was something you did when you wanted to stay in the game. Anyone remember guys like Bill Gates and Paul Allen with Microsoft? How about guys like Sam Walton of Wal-Mart and even Steve Jobs of Apple? The one thing they (and so many others in management) had in common is that even after they'd established growing and successful businesses they most definitely remained very involved owners and shareholders of their companies. Now, too often founders and early investors are looking to the individual investor as an exit strategy-meaning you're going to make them worth billions instantly, even as they transfer the risk of ownership to your wallet. In conjunction with this keep one other very relevant thing in mind. Wall Street investment bankers don't necessarily help bring a company's stock public because the bankers truly believe in the company's future success. They do so BECAUSE THEY GET PAID NICE BIG FAT UNDER WRITING FEES, often to the tune of millions, if not tens of millions of dollars. So whether the IPO ultimately succeeds or fails for investors really doesn't matter. They've gotten their money and are long gone.

Case in point, 26 year old Snap CEO Evan Spiegel reportedly got a $750 MILLION BONUS FOR TAKING THE COMPANY PUBLIC ON TOP OF THE $5.5 BILLION WORTH OF STOCK HE HAD AS THE IPO WAS PRICED and that investors of the IPO paid for. And therein lies the rub in today's markets. Whether a newly IPO'd business lives or dies is moot as long as the IPO "works". And that's huge leap of faith considering that 97% of the company's revenue came from short-term advertising. Apparently for them long-term advertising customers don't exist.

In closing I would offer three words of advice when it comes to IPOs.

First, wait until the euphoria and glitz has passed and the insider "lock up" period is over. That allows the institutional traders time to separate nervous traders from their money. Then, average in over time if you want to own the shares.

Second, make the company prove that it merits your money and trust. That usually takes a few quarters. The reason is very simple. IPO hype is based on what "could be', not what "is". Many times a company's management can't make the jump from a great idea/concept to what actually translates into sustainable profits.

Last, use lowball orders to get the price YOU want. It's always better to name your price and have the market come to you than try to chase a hot trade. Temptation is always the most powerful of emotions, which is why Wall Street hypes IPOs they way they do. They want to play on the fear of "being left out or behind'.

Hope this gives some insight into how the IPO market is so often rigged. As I said in an earlier post, IF a company is truly a viable business then even if one waits six months, a year, five years or more then it can still turn out to be a GREAT investment and make you tons of money. My clients saw that time and time again; I've been fortunate to benefit from such in my own portfolio as well. Remember too often the "bragging rights" of being in on the next "hot thing" turn into "sobbing rights" when the investment eventually blows up!

In the end perhaps the most valuable lesson that hopefully many investors can take from this disaster is found in the words of the head of Oaktree Capital Partners Howard Marks who observed: "Experience is what you got when you didn't get what you wanted". 'Fraid a lot of folks will find that observation a wise and appropriate one. In the end some of our most valuable and profitable lessons learned can be when we feel the sting of failure.
« Last Edit: May 15, 2017, 01:35:35 pm by Vantage 8 dude »
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