“The enthusiasm for Snap came despite the decision by some portfolio managers to shun the stock over concerns about the company’s decision to issue shares with no voting rights, a first in the US, and to ensure control for the co-founders even if they leave the company. In addition, some analysts questioned whether an app with no profits and fierce competition from other social media groups warranted such a lofty valuation. Last year the company recorded a net loss of $515m, up from $373m in 2015, on revenue of $405m..
“Snap’s IPO filing with the SEC forged new ground, referencing sexting, “poop”, and a cartoon ghost spewing a rainbow.”
- ‘Snapchat owner closes up 44% for $28.3 billion valuation’, Nicole Bullock and Hannah Kuchler, The Financial Times, March 2nd
The Onion got there first. No amount of knowing, middle-aged smugness at the apparent absurdity of the Snap IPO can rival their November 1999 story,
“Anabaena, a photosynthesizing, nitrogen-fixing algae with 1999 revenues estimated at $0 billion, will offer 200 million shares on the NASDAQ exchange next Wednesday under the stock symbol ALG. The shares are expected to open in the $47-$49 range.”
Nevertheless, enough ‘investors’ have got together to give Snap a market capitalisation, for the time being, at least, of $31 billion. Perhaps Stanley Weiser was right when he suggested that a fool and his money are lucky enough to get together in the first place. Beyond the subjective assessment of Snap’s inherent worth, its IPO appears to provide further confirmation that millennials have little to offer the world beyond a myopic focus on self-obsession. And one can hardly blame Wall Street for giving people what they think they want: if the ducks are quacking, feed them.
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