From the Slope of Hope: One of the hottest, most widely-anticipated IPOs in years took place in March of this year - -Snap, Inc., which is, of course, the owner of the Snap app (although they insistently refer to themselves as "a camera company".) Perhaps another mission statement is in order, however, as they appeared to have now expanded to..........Halloween costumes.
No, I am not making this up. The one and only product from Snap you can purchase on Amazon is, in fact, this costume in which you can pretend you are a hot dog.
So the company has never made a dime, and in fact loses hundreds of millions of dollars, and its shareholders have managed to lose half their money since this dog (so to speak) went public:
In spite of this fiasco - - and laughable diversification of its business model - - I must again request that you cut Evan Spiegel, Snap"s CEO and founder, some slack, as he continues to be fully distracted by his new wife, Miranda Kerr, who found Mr. Spiegel terribly attractive around the time he made his gigantic fortune. How about that.
While Snap, Inc. ($SNAP) shares bleed outfollowing a huge miss - currently down over 11 percent, a hilarious hot-mic moment happened during their earnings call.
When pressed by Wall St. analyst Rich Greenfield of BTIG for more details on their push notification policy, CEO Evan Spiegel gave a convoluted and snarky answer - dodging the question and then telling the analyst to "go for a google" resulting in BTIG"s Brandon Ross exclaiming (loudly) "I didn"t even understand his response!"
Definitely the best thing for CEOs to do when shares are falling 17% is to sound annoyed that people don"t "understand" his company. https://t.co/N9yS2VkFey
"I"ve got two questions for Evan. Evan, on your first investor call and actually Imran [Khan, Snap chief strategy officer] just mentioned it earlier as well, you have both spoken about how others use growth hacking to inflate [daily active users] and how it really hurts .... the platform"s relationship with users. Yet we definitely, over the past quarter, begun to see push notifications from Snapchat, essentially alerting us to: "One of our friends or one of our connections has published a story, would you like to go see it?"
Wondering despite Imran"s comment earlier, has your philosophy on growth begun to change? And then two, time spent on Snapchat and Instagram based on the recent comments from Instagram seems like it"s fairly similar. But there"s a very — my sense is there"s very little direct messaging that happens on Instagram, implying that most of their time spent is actually content consumption. When you think about Snapchat"s 30 minutes of usage per day, how much of that is actually Stories, including Discover, versus basically communications? Thanks.
Spiegel:
Yeah. So on the first question; we"ve been sending notifications like that for Stories for friends since 2014, so I"m not sure why you"re just seeing that now. On the "time spent" stuff, I think time spent is definitely interesting metric because unlike daily active[users], time spent is zero sum.
So for us, in Q2, we saw over 40 minutes spent per day for users under 25, and over 20 minutes per day for users over 25. So I think that"s some strong growth for us on the time spent side.
We don"t break out Stories versus communication, but I think the important thing is we"ve done a very good job innovating around monetizing communication. I think historically, that"s been challenging for folks. So, you know, we"re really excited about the way we"ve monetized communication with our creative tools.
Greenfield:
So maybe just to be clear: What exactly is the "growth hacking" that others do? If you sending push notifications is not "growth hacking," what are others doing that you consider to be growth hacking and not real DAU growth?
Spiegel:
Yeah, so I think there are plenty of examples online [laughs] if you want to go for a Google. But I think the most important thing for us is that when we"re telling you about content on a service that is really highly relevant to you and from your very close friends. And I think people, as they become more aligned on push notifications to sort of relax the standards there, and I think it"s important for our business.
Greenfield:
Thank you.
Operator:
Our next question is from Mark Mahaney with RBC ...
While the exchange was certainly one of the more heated during the quarterly call,there were several instances where analysts asked for more guidance on new products like Snap Maps or advertising tools, only to be met with vague responses that it was still "early days."
"Snap"s unwillingness to provide Street guidance will continue to be a disservice to shareholders as estimates continue to fluctuate wildly and it introduces unneeded uncertainty into results," Jefferies analyst Brian Fitzgerald wrote in a note.
The disjunction between Snap and Wall Street comes in spite of Snap"s so-called secret weapon, Khan, a former star analyst and investment banker. The finance veteran helped lead Alibaba"s massive IPO — subject to its own skepticism from investors at the time— and was one of the first analysts to become an authoritative commentator on internet media businesses like Facebook.
Snap, like many competitive tech start-ups, has been secretive about its products and operations.But some commentators perceived Spiegel"s response as arrogant.
Spiegel, if he has any game, was certainly not on it during the call.
With Millennials piling in and Barrons bashing it, Snap Inc"s shares have plunged this morning after opening up over 4%. The stock is now down 14% from its spike highs on Friday and volume is heavy as spec longs cover into shorts" T+3 "borrow" availability tomorrow.
As we noted previously the median age among Snap buyers on Thursday was even younger, at 26. (That happens to be the same age as Snap co-founder–and newly minted billionaire–Evan Spiegel.)
Rebecca Shoenthal, a 22-year-old journalism student at the University of North Carolina at Chapel Hill, was among them. She said she bought four shares of Snap for about $24 each. She put in an order for them on Wednesday night, stipulating that she would pay as much as $40 per share. “I wanted to test the waters and play around with some money I wouldn’t be too devastated to lose,” Ms. Shoenthal said. “I think I’m going to stick it out for at least a few years.” Ms. Shoenthal, who uses Snapchat every day, said this was her first big stock pick. She’s gotten interested in stocks this semester because of classes she’s taking on personal finance and branding. She thinks the prospects for Snap are bright, particularly given that Snapchat is changing the way many young people, including her friends, read the news.
There was also outsized attention from younger users on StockTwits, a popular social media platform used for sharing trading ideas. About 40% of users are between the ages of 18 and 34, but 60% of those following or viewing the stream of messages about Snap fell within that age range, the company said.
Kaleana Markley, a 29-year-old wellness consultant who lives in San Francisco, bought $100 worth of shares on Thursday using a company that offers gift cards for stocks, called Stockpile. “I have high hopes” for Snap, Ms. Markley said. “I think they are doing really cool things.” She doesn’t do much investing generally, citing student loans and the high cost of living in the Bay Area, but got excited by the talk of the IPO. One promising sign of the company’s growth prospects, she said: Even her parents are using it now.
Some disappointed Millennials this morning...
Not worth $40 billion anymore.
Barron"s bashed the stock over the weekend, following Pivotal"s initial "sell" rating and Needham analyst Laura Martin writes in a note today that Snap is a “lottery-like” stock, and while lottery tickets sometimes pay off, risks for Snap include a total addressable market that’s 80% smaller than Facebook’s and no clear path to profitability before 2020. Rates new underperform, with share value of $19-$23; says share price should decline based on FB and Google EV/sales ratios. Other negatives include competitors replicating Snap’s best ideas and margin trajectory.
