Will The SNAP IPO Mark The Top?

The only aspect of the SNAP IPO that was more horrifying than the media attention given to monitoring SNAP’s first trade of the day is the valuation assigned to it by investors. Janet Yellen undoubtedly was not thinking about SNAP when she happened to mention in her Congressional testimony last week that “valuation metrics do appear…stretched.” That assertion is unarguably one of the most shameless understatements in history.

SNAP is being marketed by its financial promoters as “a camera company.” In reality it’s little more than a glorified social media business model. The product empowers the user to send photos and videos to friends rather than using a text message. Big deal. In 2016, SNAP generated $404 million in revenues and but lost $514 million. That’s the manipulated GAAP number for net income. The Company’s operation burned $611 million. Note: these are the numbers prepared by the Company that were used to generate the highest possible price for the IPO, which means the numbers are likely not accurate.

At IPO SNAP was valued at 54 times revenues. That’s the kind of multiple that a venture capital company would pay for a newly emerging company with a unique product that is still embedded with largely unquantifiable risks of the investment going to zero. SNAP is a newly emerging company which offers just another “flavor” of social medial. Mind you, this is a social media tool that is primarily used by millennials and “Gen Z’ers” who quickly tire of the latest cellphone app fad du jour. In fact, new user fatigue is already showing up in the number.   Over the last 4 quarters, the quarterly growth in growth “active daily users” has slowed considerably – just 4% from Q3 to Q4 – and its flat-lined in the rest of the world outside of the U.S. and Europe.

As a social media company, SNAP’s user growth-rate curve is already significantly below that of Facebook and Twitter in their early stages as public companies.  In truth, if SNAP wants to insist on being a “camera company,” then its stock likely will follow the same path as that of GoPro.  GoPro IPO’d in June 2014 at $24.   The first trade was at $30. The stock ran up to $98.  It currently trades at $9.40.

The overarching issue here is whether or not the grotesquely overvalued SNAP IPO will mark the top of this seemingly indefatigable rise in stocks.   Since closing above the 20k holy grail level on February 3rd, the Dow has risen another 1,100 index points in just 17 trading days, while the meatheads on financial bubblevision have been mindlessly cheering on the action with drool sliding down the sides of their mouths.   27.5% percent of this move occurred after Trump’s congressional address Tuesday night.  Conspicuously absent from the speech was any new policy ideas which might have been responsible for causing the ludicrous spike up in stocks.

David Stockman has called this action in the stock market “the greatest sucker’s rally of all time.”  In today’s episode of the Shadow of Truth, we discuss the insanity that has drawn mom and pop retail investors into the “warm water” with its Siren’s call.

17 thoughts on “Will The SNAP IPO Mark The Top?

  1. In the words of Max Keiser:

    Snapchat describes a narcissistic product of a narcissist company going IPO in a narcissistic city (of Los Angeles), the city that was built on the foundations of narcissism.

      1. Perhaps. But to his credit Keiser has no intention of ever using Snapchat, does not live in Los Angeles & (at least claims that he) hates both Hollywood & Wall Street. So regardless of whether Max Keiser may be controlled opposition or not, at least I’ll give him credit when he’s saying the right things.

  2. BTW, on a different topic of current Jeff Sessions circus underway:

    Jeff Sessions is a fascist (in the pockets of tobacco, pharmaceutical & private prisons industry lobby). I can’t stand Jeff Sessions. His attack on legalized marijuana are totally unnecessary, his “law & order, tough guy protect police at all costs” is nothing but fascist talk justifying police brutalities, police militarization & attacks on 4th Amendment. But there are actually things I like about Jeff Sessions, e.g. strong 2nd Amendment stance, claims that welfare state/minimum wage are bullshit, social security can’t possibly continue to be funded, Planned Parenthood is a murderous criminal organization etc.

    Despite my dislike of fascist Jeff Sessions, I’m DISGUSTED by the “Fake News Russia” coordinated attacks on him by the DNC & Deep State fascists. Reading the tea leaves, there is something more sinister at play here. Supposedly Jeff Sessions is in possession of extraordinary Pedophila criminal material on too many Deep State actors, top brass of DNC & RNC, and in an authority to act upon it.

    There is an unprecedented civil war currently going on involving the Deep State underneath the surface . This civil war is probably worse & far more dangerous than what John F Kennedy faced against coordinated Deep State opposition by John Foster Dulles/Allen Dulles, Lyman Lemnitzer, Prescott Bush/George HW Bush, J Edgar Hoover, Lyndon Johnson etc.

    1. I could care less that he met with a Russian ambassador. It’s irrelevant. But is Sessions dropped dead tomorrow, would anyone give shit?

      1. Indeed.

        What truly matters is that the Deep State gets defeated. By the looks of things, doesn’t appear this will happen. “The Empire Fights Back.”

        Infighting between different factions of Deep State, or even a fight between a smaller fascist tyrant outside Deep State with the Deep State doesn’t help the people.

    2. Let me get it straight, Max Keiser is an admired pundit, but Sessions is a fascist. There just isn’t enough duct tape. I need to stop reading the comments,lol.

      1. Of course!!! Your simpleton thinking that can only see in black/white & no shades of gray implies that you don’t need to read any comments. Only thing you need is Fox News & miles & miles of duct tape.

        No matter how much reprehensible “Russian ambassador” charade fascists like Pelosi, Schumer, McCain, Lindsey Graham & other Deep State actors are pulling about Jeff Sessions, fact remains that Jeff Sessions is a fascist. Plain & simple.

        If tomorrow, Sessions announces that he’s making major elite pedophile ring arrests causing fascist heads to roll, will I cheer loudly? Hell yes! I’ll go celebrating all around town!! But that doesn’t change the fact that Sessions is a fascist. Anyone who has no intention of addressing one of the biggest root causes of urban decay in a city like Chicago, yet wants to make the problem worse by “Federalizing police forces” is a fascist. Sessions has got the other big root cause of inner city decay (welfare state evil) 100% right. But he’s 100% wrong in his “War on Drugs” stance. So again, Jeff Sessions IS A FASCIST.

        Enemy of enemy is NOT necessarily a friend. Which is of course a very difficult concept to fathom with simpleton thinking.

        1. We get it – you like drugs. Why dont you go full retard and call him hitler? As if there arent millions of people across this country – including me – that think drugs tend to cause more problems than they solve (including the legal ones). That said, go ahead and destroy your brain and body, makes no difference to me or millions like me. Just dont try to rob me to feed your addiction, because thats where the indifference ends.

          And no, I dont own a tv. Havent in years.

          1. We get it. You like drugs. Prozac, Lipitor, Selective Serotonin Receptor Inhibitors. The whole gamut of them. You like Fast & Furious weapons trafficking across Mexican border to run civil war between Sinaloa & Jalisco cartels for marijuana. You like Deep State protected Medellin cartel cocaine runs from Colombia to Bermuda to Texas-Arkansas for Bush-Clinton mafia. You like paying Federal taxes to IRS for American troops guarding opium fields in Afghanistan. You like Deep State protected heroin dumps from Afghanistan to Turkey to Germany-Belgium-UK-Canada-US for Bush-Clinton mafia. You like criminal cartels of HSBC & Wells Fargo laundering Bush-Clinton cocaine & heroin funds in Panama & Cayman Islands. You like Deep State dumping of smuggled cocaine into slums of Chicago, Oakland, Los Angles & Philadelphia. You like that real reporters like Gary Webb who shine light on the Deep State are promptly eliminated. You like tax-subsidization of private Deep State actors like Dyncorp, Blackwater, GEO Group that keeps their show going perpetually. You just LOVE the Deep State. PERIOD.

            That said, go ahead and destroy your life savings paying Federal Taxes @ the rate of 100% for your servitude to the Deep State. Just don’t try to rob me to feed your addiction to fascism. Because that’s where the indifference ends.

            P.S.

            Jim Willie is/was absolutely right.

            Americans don’t know what reality is.

            Americans don’t know what money is.

            Americans don’t know what productive capital is.

            Americans don’t know what the true value of labor is.

            Americans don’t know what fascism is, if it bit them in the ass.

            Americans don’t know JACK SHIT.

  3. 54 times revenues! Makes my little co worth about $30million on that basis. I will accept any offers over $15million. Bargain. Hahahaha…….

  4. Dave, my daughter and her husband both mid-twenties, have high paying high tech jobs here in Seattle. I added Snapchat to my iPhone because she told me to, but they rarely use it, and they are avid iPhone app users with FB, Instagram, etc. The current valuation of SNAP is beyond ridiculous.

  5. I think SNAP IPO’d because the flow of private capital dried up. Given a choice, they would keep taking in new money to keep their “valuation” growing more and more while burning through money and not making a dime of profit. I don’t think SNAP will crash and burn right away. Remember, even the serial loss maker TWTR traded at $70+ at one time. Now that FB has bloated from less than $20 to over $130, wall st crooks need a new “growth” stock to have fun with. The CEO is young and has already earned a reputation for saying no to Facebook’s $3 billion take over bid. Right now, stocks are trading purely on emotion and I think there is plenty of it to keep SNAP stock afloat. I am not at all suggesting “investing” in it but if you are a gambler who thrives on volatility, you can use SNAP as a trading vehicle.

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