back to article Rap for chat app chaps: Snap's shares are a joke – and a crap one at that

First, we'll look at some quick facts at Snap – the Los Angeles-based developer of Snapchat that debuted on the stock market on Thursday, March 2. Snap's IPO price was set at $17 a share but hit the market at $24.47. Snap's shares were highly unusual in that they didn't give the holders a voting right. Regardless, the first …

  1. jgarry

    A very smart rich guy explained the stock market to me. It's not Vegas. It's Wildebeests.

    Everyone run this way! Everyone run that way!

  2. Fazal Majid

    "went against the underwritten rules of Wall Street"

    I think you meant "went against the unwritten rules of Wall Street".

    1. John Brown (no body) Silver badge

      Re: "went against the underwritten rules of Wall Street"

      He may have done, or maybe he was playing with words since a lot of the major investors are in the insurance business, another gambling option where the "house" always wins.

    2. Youngone Silver badge

      Re: "went against the underwritten rules of Wall Street"

      Keiran also didn't mention that Snap itself don't see how they are going to make any money:

      There seem to be lots of articles floating around about how Snap's user base is not really growing anymore, which would seem to be death to this sort of business.

      If Snap continues to make a $500 million loss on $400 million of revenue, there's only one way for the share price to go, regardless of institutions trying to prop it up.

      Surely?

      1. Yet Another Anonymous coward Silver badge

        Re: "went against the underwritten rules of Wall Street"

        Simple - Lose money on every customer but make up for it in volume

        1. BinkyTheHorse

          @Yet Another Anonymous coward

          Some people may think that's a joke - but that's exactly what they've done with the IPO.

  3. Lord_Butt

    Buy low, sell high.

    And dump SNAP

    1. Mark 85 Silver badge
      Meh

      Re: Buy low, sell high.

      In Snap's case... the stock "investors" should have short sold it an hour or so after the market opened.

      Wall Street isn't about value or anything at all except pure greed and making money. Kieren is spot on about who says what about the stocks. If you make some money on one.. it's a great stock. The so-called "active investors" are the carrion eaters of Wall Street that feed on everyone else.

      1. Tom Paine Silver badge

        Re: Buy low, sell high.

        Blew up your day-trading account, eh?

        1. Mark 85 Silver badge

          Re: Buy low, sell high.

          Nope. Didn't go anywhere near that steaming pile.

  4. Anonymous Coward
    Anonymous Coward

    traditional thinking...

    I know it's unusual to apply maths and logic to any of this, but I am still at a loss about where the money comes from, whose money is it?

    Typical situation today starts with a rubbish idea that wont make money, but gets $20,000000 then its gets some users and still doesn't make money, it starts to loose it.

    Then they IPO and everyone "in the know" makes money, so where are the people loosing the money? Why are they still putting money into things like this.

    1. DougS Silver badge

      It came from the VCs

      All that money they pour in multiple rounds of VC financing, a total of about $2.5 billion. Now they've cashed out for a big profit (especially the earliest rounds) but the company was able to sell new shares during the IPO. So they've built up some cash to survive a few more losing quarters until they figure out how to monetize their userbase.

    2. thegroucho
      Go

      Re: traditional thinking...

      As Gordon (Gekko) said - "Greed is good".

  5. Anonymous Coward
    Anonymous Coward

    Like Snap???

    I've got some CDO's to go along with that... Wall Street meets Tech: Always great for them, always sh1t for us! Look at the hype surrounding Tech @ CES... Late night infomercials promising quick riches...

  6. Anonymous Coward
    Anonymous Coward

    Snap Warns It ‘May Never Achieve’ Profitability

    Doesn't seem to matter. Why? Some Americans are so stupid they're not even buying the right stock. Sure glad I don't play this game of soldiers:

    Aw, Snap. I bought the wrong shares!

    http://www.bbc.co.uk/news/business-38915352

  7. Anonymous Coward
    Anonymous Coward

    The most likely outcome is that Microsoft will buy them for 60 billion.

  8. GrapeBunch Bronze badge

    Logic

    Since the invention of the telephone, it has been whatever the guy on the other end of the line is able to convince the potential investor. Or whatever picture he is able to paint in their mind, if you want to wax lyrical about it. Also applies to some elections.

  9. ecofeco Silver badge

    Pump and dump

    Pump and dump.

    1. Anonymous Coward
      Anonymous Coward

      Re: Pump and dump

      http://www.rollingstone.com/politics/news/the-great-american-bubble-machine-20100405

  10. Jim Cosser

    Really good and interesting write up

    Reminds me of the Wolf of Wall Street book.

  11. Mage Silver badge
    Devil

    Pyramid selling like scam?

    Like Anglo Irish Bank the early guys get the profit, but eventually they sell to "marks". Then the price will implode.

    The non-voting nature of the shares "screams scam".

  12. Whitter
    Mushroom

    Slow it all down.

    By whatever means might have a chance of working.

    e.g. Buy a share: can't sell it for 6 months.

    That example is too simple to work in reality, but there must be some reasonable system that encourages stocks to be bought because they represent a company of value, rather than bought as part of a numbers-game that reflects no meaningful sense of worth to anyone outwith the game.

    1. Anonymous Coward
      Anonymous Coward

      Re: Slow it all down.

      Tell that to the high frequency trading people.

      Who only want quick buck and the hell with it once sold.

      1. This post has been deleted by its author

      2. Whitter
        Go

        Re: High frequency trading people

        Screw those guys. Never did anything for anyone.

  13. John Smith 19 Gold badge
    Unhappy

    Historically pre selling big blocks to "institutiional" investors was how you ensure success

    The fact they bought gave people confidence it wasn't a scam.

    Otherwise it is indeed money for just existing and being big.

    Morgan Stanley have tasted blood. I think they'll be wanting to do more of these. I hope they do. It expose the whole thing as a mix of scam and delusion.

    As for voting rights. How many companies have gone down the pan while the majority investors (mostly pension funds) did FA because the management kept saying the right things while failing to deliver a turnaround (except in their personal finances of course).

  14. deadlockvictim Silver badge

    Snap reminds of a KitKat ad from the Eighties

    https://www.youtube.com/watch?v=Q4VbSbNJWso

    (Apologies that the video quality is so poor.)

  15. Tom Paine Silver badge

    a ludicrous financial system that at best resembles a Vegas casino.

    This "casino banking" nonsense meme has been around for ages -- was it Vince Cable who coined it? Anyway, trading is absolutely nothing like gambling in a casino. For a start, just because you don't understand why prices for some asset or instrument move in a particular way, it doesn't follow that it's done to nothing more than pure luck. I don't know which logical fallacy that one is, but it is one. (Is there an "I don't see it therefore it doesn't exist" fallacy?)

    1. Raumkraut

      Anyway, trading is absolutely nothing like gambling in a casino. For a start, just because you don't understand why prices for some asset or instrument move in a particular way, it doesn't follow that it's done to nothing more than pure luck.

      It's maybe a more apt comparison than you give credit for. For example, even roulette wheels are governed by the laws of physics, and just because you can't calculate all the physical interactions of the ball and wheel during a spin, doesn't mean that the end result is pure chance.

      With all the independent actors in the financial markets, all doing their own thing with their own thoughts, it is more or less impossible to predict what is going to happen in any one stock, any more than it is to predict where the roulette ball will land. Unless, that is, you are already in a position to control enough of the variables yourself.

    2. This post has been deleted by its author

  16. John Smith 19 Gold badge
    Unhappy

    "Anyway, trading is absolutely nothing like gambling in a casino. "

    A regular business school experiment has been to run a share selection test against a bunch of shares selected by sticking a pin in a list of share names at random.

    Quite offen the shares can produce quite reasonable returns.

    Anyone whose read "Flash Boys" will understand the American stock market is highly stacked against anyone making any kind of large scale stock purchases.

    The clue is that Hedge Funds do not make losses and have crashed when asked to honor actual stock purchase orders they have bought automatically. An organisation that does not make a loss, ever is a statistically impossibility in a fair market.

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