And now, almost two years later, it's less "Funny ha ha" and more "Funny holy shit." See?

We're not saying that SNAP's entry into life as a publicly-traded company is not going smoothly, but we are saying that the SEC has wondered aloud how anyone let it happen.

But it turns out that there might be some hilarious answers to this essentially rhetorical question:

One day in late 2016, executives at the Big Board ordered dozens of regulatory staffers to head down to the trading floor so it looked busier than it really was — an elaborate ruse to impress the chief executive of Snap Inc. as he weighed whether to list the vanishing-photo app maker’s shares there, The Post has learned.
NYSE brass hatched the sneaky sham, secretly caught on video by a disgusted employee, after Snap CEO Evan Spiegel remarked during a Nov. 18, 2016, tour of the exchange’s historic building at 11 Wall St. that the trading floor looked empty, according to a source.
In response, Thomas Farley, then the president of the exchange, promptly ordered regulatory officials to fill it up, insiders said.

Haha, solid prank, Farls! That Valley douche wouldn't know a floor trader from a risk analyst. Awesomesauce.

According to the report, it's unclear if Spiegel actually got a look at the trading floor, but that feels immaterial to the genius of Farley's last-minute inspiration to fuck with him...

Within minutes of Farley’s order, sources said NYSE’s internal regulators — who are supposed to police the exchange, not help it win business — received an e-mail from an assistant to Anthony Albanese, NYSE’s chief regulatory officer.
The message: Albanese wants you down on the trading floor.
Between 50 and 70 regulators then stopped their work and took two elevators from the 20th and 21st floors down to the trading floor, according to two sources.

Bwahahahaha. Why did no one invite us?! Can we come the next time someone does this? Like isn't Uber maybe about to visit?

A NYSE executive told The Post that the exchange has ended the practice of telling regulators to go down to the floor for specific events. At the same time, NYSE executives tried to play down the Snap sideshow, insisting that employees are routinely encouraged to come to the floor to see business moguls and celebrities, for example.

Yes of course [wink], we totally understand [subtle thumbs up], you're done making billionaire tech bros think that they're going to succeed as a public company on NYSE.

We miss Farley.

NYSE execs used other staff to fill trading floor to impress Snap CEO
[NYPost]

(For those of you wondering WTF The Water Coolest is, and what it's intentions are with the Opening Bell ... don't worry we've made you a new friend.)

Snap back to reality, oh there goes gravity [The Water Coolest]

Snap is facing subpoenas from both the SEC and DOJ over whether or not it misled investors prior to its IPO regarding how Instagram's copy-cat features would adversely affect the firm's stock price. The action stems from a lawsuit set forth by investors.

For what it’s worth, Snap’s pre-IPO filing had this to say: “Instagram, a subsidiary of Facebook, recently introduced a “stories” feature that largely mimics our Stories feature and may be directly competitive.” However, salty "traders" who probably got Snap as their free Robinhood stock claim the company didn’t go far enough.

You can't blame the angry horde of investors for shooting their shot ... Snap has had nothing short of a pathetic run as a public company.

Snap is being probed over its IPO because some investors are salty about losing money [TechCrunch]

Dead man walking [The Water Coolest]

Please, make it stop. Sears is reportedly finalizing a $350M bankruptcy loan that will keep the lights on ... through the holidays. As in 39 days from now. Combined with the $300M already secured by the retailer, Eddie Lampert should be able to drag out his perverse Green Mile metaphor at least through Q1.

Sears reportedly finalizing $350 million bankruptcy loan with Great American [WSJ]

Sweetening the Dell [The Water Coolest]

World-renowned curmudgeon, Carl Icahn who owns 8.3% of Dell's tracking stock is claiming that the buyout deal is undervaluing the DVMT stock and robbing shareholders of $11B in value. Dell is said to be upping the ante with a $13B cash portion of the deal.

Dell Sweetens Key Deal Terms in Path Back to Public Markets [WSJ]

What else is happening today?

• Despite a 38% increase in revenue, Uber's loss hit almost $1B, an increase quarter-over-quarter. The self-reported financials were released ahead of a (slightly less highly) anticipated 2019 IPO.
• Victoria's Secret hasn't exactly been at the forefront of the women's empowerment movement. Exhibit A: scantily clad "Angels" leaving little to the imagination in primetime (and in 3D!). As a result, sales have slumped at the L Brand owned lingerie peddler. And now, CEO Jan Singer is on her way out as the brand struggles to find its way in 2018.

Influencer Luka Sabbat was sued on Tuesday for failing to live up to an agreement to promote Snap Spectacles on his Instagram account.

Okay, let's get into first layer of schadenfodder here; This whole thing is a Mad Libs of hateful modern fame stereotypes. To wit:

Sabbat, 20, was photographed in September at events with Kourtney Kardashian. People recently reported that the pair split after briefly dating. He also appears on the Freeform series “Grown-ish,” and has 1.4 million Instagram followers.
PR Consulting Inc. says it signed an influencer agreement with Sabbat on Sept. 15, the day after he was first photographed with Kardashian. The PR company filed the lawsuit in New York Supreme Court, alleging that Sabbat breached his agreement to post three Instagram stories and one post to his Instagram feed in which he would be wearing the spectacles.

According to our much more popular siblings over at Fashionista, this Sabbat character is a genuinely cool character and his style is a true marker in the style game. He's friends with Kanye and is seen at all the places one is supposed to be seen. As for PR Consulting, the vanilla name apparently belies the most powerful and terrifying publicity machine in the fashion world. It must have seemed like a rather sweet deal for Snap CEO Evan Spiegel, a guy who has seen his once-unstoppable tech startup do this since going public:

So deals like the one with Luka Sabbat seem rather clever. A way to quietly influence the impressionable youth who said "NO THANK YOU" to Snap Spectacles 1.0 that v2.0 is way doper. What could go wrong?

Sabbat made only one Instagram story and one post to his feed, and did not submit the post to PR Consulting for pre-approval, the suit alleges. Sabbat also reneged on an agreement to be photographed in public wearing the spectacles during the Milan or Paris Fashion Weeks, according to the suit.

Hmm, well at least it was cheap, right?

Under the contract, Sabbat was to be paid $60,000 — with $45,000 paid up front. The suit seeks reimbursement of the $45,000 plus another $45,000 in additional damages.

Here's the thing about this; to fashion types, it's a bad boy influencer refusing to follow through on a lame agreement to wear a shitty product despite the potential to anger a massively powerful agency. That's embarrassing enough for Snap, but it's materially worse when you remember that news isn't siloed and that this hot gossip is going to spread to the desks of tech sector equity analysts who are already beating SNAP to shit on a daily basis for its litany of other problems.

It's not a great look when the dudes on Wall Street find out that even the people you're paying to wear your shit in public won't wear your shit in public. It's an even worse look when you're powerful PR/marketing agency is not hiding the fact that it's suing people to make a big stink out the fact that the people you're paying to wear your shit in public won't wear your shit in public.

Like we said, we're enjoying this on many levels.

Luka Sabbat Sued For Failure to Influence [Variety]

When Snapchat first launched it was just another photo app. Then it added more features, and a whole lot more users, and it seemed to promise something greater, a whole new way of communicating. Then Snapchat rebranded as Snap Inc and became a “camera company” with the rollout of digital goggles it called Spectacles. Finally, in March of this year, Snap became a publicly traded stock.

Today Snap is doing great, so long as you ignore the app, the Spectacles and, most crucially, the stock. After-hours Tuesday the company reported earnings that made its shares do this:

The company beat on earnings (-14¢ per share vs -15¢ expected) but missed on revenue ($208 million vs $239 million) and daily active users (178 million vs 182 million). But it wasn't the headline numbers that sent investors into convulsions. Part of it had to do with this, from CFO Drew Vollero:

“Unfortunately, we misjudged strong early demand for Spectacles and purchased more inventory than we now anticipate being able to sell. As a result, we recorded a $39.9 million non-recurring expense primarily related to excess inventory and purchase commitment cancellations... Moving forward, we will continue to be in the market place with Spectacles and expect modest revenue from the product line.”

Alright, so being a camera company in the iPhone age was a bit of a moonshot. But at least Snap still has its core product to rely on, right? Right...? CEO Evan Spiegel:

One thing that we have heard over the years is that Snapchat is difficult to understand or hard to use, and our team has been working on responding to this feedback. As a result, we are currently redesigning our application to make it easier to use. There is a strong likelihood that the redesign of our application will be disruptive to our business in the short term, and we don’t yet know how the behavior of our community will change when they begin to use our updated application. We’re willing to take that risk for what we believe are substantial longterm benefits to our business.

On one hand it must be refreshing to hear an executive speak so frankly about the limitations of his company's signature (and basically only) application. Then again, it might not instill confidence among shareholders to hear that it took four years as a private company – and two quarters as a publicly traded one – for management to realize that their central product had a fundamental limitation; and then moreover, that the plan they've concocted to remedy the situation comes with zero guarantees that it won't fuck up the existing (and rabidly loyal) user base. For this, investors are happily watched Snap burn through $443 million in Q3.

So yeah. Snap is stillSnap.

The S&P 500 knows what we're talking about:

Index giant S&P Dow Jones Indices announced late Monday that companies with multiple share class structures, such as Snap, are not eligible to join the flagship S&P 500 index.

Yeah, sure, this is a "corporate governance issue." We get that co-founders Evan Spiegel and Robert Murphy control almost every single voting share (or at least they did before yesterday), and it is not lost on us that this is very dumb, but we also think that Snap might have been a little more tempting if its post-IPO performance didn't look like this:

Basically, Snap is a way too drunk frat bro trying to get into the club and being denied by a bouncer who cant help notice that Snap's expensive clothes smell of vomit, his pupils are dilated as too look almost black, and he is mumbling something about "Having a rough night." Sure, the bounce is going to say that it's because Snap is wearing sneakers, but we all know it's because Snap is a mess...and also Facebook is already inside and nobody wants any trouble.

Snap Barred from S&P 500 Under New Rules [WSJ]

When Mark Zuckerberg offered Evan Spiegel and his bros $3 billion for their popular app, he rightly assumed that the young men would leap at the opportunity to cash out like bandits on a platform designed to make nude selfies disappear. Amazingly enough, the offer was spurned and Zuck set in motion a long-term plan to fucking destroy Snapchat.

While there's no actual proof of what was said at the time, it is not beyond reason to posit that Zuck reached out to Kevin Systrom, the CEO of Instagram who had accepted a $1 billion offer from Zuck in April 2012, and asked "Can you do what Snapchat does?"

"Oh, yeah, totally. It's not that hard at all," was Systrom's likely reply. "Do you want me to start on that now?"

"Yes, that would please me," purred a likely smirking Zuck. "But keep it quiet and take your time. I want to do this when the timing is most crushing to that LA frat boy and his cabal of douche bros."

As Zuck lied in wait, Snapchat grew into Snap, pulled the wool over the eyes of old people throughout finance and went public in one of the dumbest IPOs ever. Seeing that his moment had finally arrived, Zuck picked up his phone, opened Facebook Messenger, pinged Systrom and typed "Unleash Hell."

Within days of Snap's IPO, Facebook had replicated almost all of Snap's functionality across of all Facebook's platforms, demonstrating with brutal efficiency that the insult of 2013 was never forgotten. And all that Snap could do was mutter "Copycat" and hope that its badly-damaged stock price would someday recover. But if allegations of Facebook "copying" Snap is what Spiegel is relying on, Facebook seems to have that shit covered.

Zuck is trotting out Systrom to respond to the argument that Instragram has ripped Snap off by rolling out its immediately popular "Stories" function, and Systrom's talking points seem to be an unequivocal "Yeah. So what?"

WSJ: What about the narrative that Instagram is taking features from the Snapchat playbook?
Mr. Systrom: Stories is definitely similar to Snapchat. I think anyone would say that. The first time you see a product show up somewhere else it feels a lot like copying but imagine a world where the only car was the Ford Model T. I’m really glad there are a lot of car companies producing different cars. Just because they have wheels and windows and AC doesn’t mean that you’re copying. You’ve got DreamWorks and Pixar and Disney, they’re all doing computer-animated film. That doesn’t mean they’re copying each other. They’re building upon a technology. I would just judge [Stories] based on how many people use it actively, which is over 200 million every day. It clearly provides unique value to people that they’re not getting elsewhere.

That right there is the most verbose way of saying "Fuck Snapchat" that you will ever read in your life.

Instagram CEO on Stories: Don’t Call It a Copycat [WSJ]

In the case of Snap, Inc, the schadenfreude is plentiful. A day after CEO Evan Spiegel assuaged investors by reminding them that the app can still make you look like a puppy, the banks that IPO'd the company continued to view it through a filter that makes dogs look like anything but.

Lead underwriters Goldman Sachs, Morgan Stanley and Deutsche Bank maintained Buy ratings (JPMorgan, the fourth lead, kept its neutral rating). Other underwriters, including Jefferies, RBC, Cowen, Citi, JMP, William Blair and Credit Suisse, wiped away the revenue and user growth misses and stayed bullish. After the stock dropped 22 percent overnight, Oppenheimer upgraded its rating from Perform to Outperform. Stifel and Barclays, to their credit, remained neutral.

Maybe these analysts are true believers in the thirst trap of Wall Street, whose current business strategy appears to be close your eyes and pretend Facebook isn't there. Or maybe the underwriting process was such a joyous experience that they can't bring themselves to dump on Spiegel and co. Or maybe Snap truly is on its way to world domination and the Society of the Spectacles is upon us. Who knows. The best we can offer is: Read below and judge for yourself.

Goldman Sachs

While SNAP remains a near venture stage investment with all of the risks that implies, we continue to believe its audience and engagement represent a unique asset that will benefit from growth and diversification of internet usage and advertiser adoption as both mature.

Morgan Stanley

1Q didn't bring the post-IPO rev/DAU beat investors were looking for, but we remain bullish about SNAP's rising engagement and the monetization potential of its user base. We are buyers on weakness (approaching IPO levels) and see execution into 2Q:17 as the next critical signpost.

Deutsche Bank

We continue to believe in the management team's ability to innovate on product and ultimately grow and monetize the user base. Given the rich valuation, the company needed to show faster DAU growth to better validate the long-term potential. While nothing in this quarter was thesis changing in our view, each quarter the company fails to surprise with faster DAU growth is likely to result in option value decay.

Jefferies

Expected seasonality in revenue led to a Q/Q decline in ARPU, but we expect Snap to buck that trend as it has opportunities to increase ad load as well as offer advertisers better targeting capability.

RBC

Yes, SNAP will be the “Beta King” for some time. But that doesn’t obviate the reality that Snap has become an innovation leader – for both consumers & advertisers – in the single fastest advertising medium today – Mobile. It has also emerged as one of the leading Media Platforms for Millennials. We believe that if it sustains its current level of innovation, it can sustain premium growth for a long time and scale to profitability.

Credit Suisse

We expect the positive aspects of SNAP's 1Q17 report (North America monetization, hosting cost leverage) to be overshadowed by the revenue and DAU miss, as this was certainly NOT in the script for its first report as a public company. And although we would certainly have preferred to have seen higher DAUs reported vs. our expectations and a higher reset to BOTH our revenue and Adj. EBITDA estimates, we settle for profit dollars for now, and our long-term investment thesis has not changed on the back of this report.

Daily active users, revenue and earnings per share all missed. The Etsy of social media lost $2 billion, largely in compensation expenses, while bringing in just $158 million. The stock fell more than 25 percent after-hours. Revenue per U.S. user clocked in at $1.71 – about a tenth of Facebook's. In other words:

But on the earnings call, Snap's precocious CEO Evan Spiegel defended the company's prospects. “People really enjoy looking like a puppy – ha – and things like that,” he said at one point. Asked by an analyst whether non-millennials can ever be led onto the platform, Spiegel recalled how he taught his grandma to use email 20 years ago (when he was six). His IPO bonus: $750 million.

We look forward to hearing reactions from Goldman Sachs, Morgan Stanley, Jefferies, RBC, Cowen, and Credit Suisse, whose positions as Snap underwriters should give them prime vantage points into their uniformly held buy thesis moving forward. “It should be a fun rest of the year,” Spiegel said.

He's making deals, bro.

Snap Inc. has signed a pact with NBCUniversal for the 2018 Winter Olympics that will make the popular messaging app a home for Olympic-themed content and allow NBCUniversal to sell Games-related geofilters and “lenses” to advertisers for the first time.
The deal for next year’s Winter Games in Pyeongchang, South Korea, expands upon a similar partnership between the two companies for the 2016 Rio Olympics. It will allow Snapchat to share clips of NBC’s Olympics content in a live story that will also feature user content.

BAM! The Winter Olympics! How you like them apples?!

Wait...why are you all giggling?

Advertising commitments related to this deal could come in between $50 million and $75 million in the first quarter of 2018, people familiar with the matter said. NBCUniversal executives unveiled the Snap partnership to advertisers Wednesday as part of the annual ad sales presentations known as the “upfronts.”

That's not a bad number but even Twitter has a deal with the NFL and Facebook has one with MLB, a deal that it is surely using as practice for when the NFL dumps Twitter. Those are sports that people actually watch, and don't take place at 3 in the morning EST.

We're not saying that this Winter Olympics deal is bad (it could in fact end up quite lucrative) Snap is in full "justification of its own existence" mode right now, which might explain why it's so fond of the Winter Olympics.

Snap Inc. Enters Partnership With NBCUniversal for 2018 Winter Olympics [WSJ]

See, The Zuck has known all along that he could destroy the Snapchat part of Snap with just a wink to his developers. But he was likely planning on having more fun with it by saying something like "Unleash Hell" and watching the metrics pop as Facebook stole massive amounts of market share from Snapchat with its own ephemeral photo and video apps. Kind of like how it's already destroying Snapchat by copying it on Instagram and WhatsApp.

But this being The Zuck, he was going to wait. What's the fun in destroying Snap so quickly when he could make it sweat and watch Snap tell everyone that it's "a camera company" that makes like one camera and that camera is a pair of hideous yellow sunglasses capable of taking photos and video? And also, holding his finger above the doomsday button while Evan Spiegel runs around with his supermodel fiancee pretending to be the next Mark Zuckerberg is just too sadistically rich an experience to cut short. There is only one Mark Zuckerberg, thought The Zuck, and he's about to fuck up your shit...as soon as it feels right.

The Zuck was enjoying this exquisite torture. He was maybe even considering letting Snap get as far as its first quarterly "earnings" report.

But like most fun things, the beautiful tension seems to have been ruined by underwriters. See, when all of SNAP's underwriters colluded on their praise of it almost immediately after the quiet period ended yesterday, The Zuck was clearly irked. It's all fun and games letting a company exist at your whim, but that shit stops being cute when Goldman Sachs throws up a "buy" rating.

So, The Zuck had no choice, you guys. He unleashed hell.

Snap Inc. shares slid Tuesday as rival Facebook said it was rolling out features that ramp up competition in the disappearing-photo app space.
Snap’s stock declined 5% in morning trade to $22.64, reversing a 4.8% boost on Monday that followed a slew of bullish analyst reports. Facebook said Tuesday it would roll out three camera-centric features to its main Facebook app, including one for photos and videos that disappear after a day, much like the Snapchat Stories that Snap first popularized. Facebook shares were up 0.1% in morning trade, matching a 0.1% rise in the S&P 500.

While this was swift and cruel, you could argue that The Zuck showed admirable restraint by not Facetiming Spiegel and saying "Take off those stupid Spectacles, Evan, I want to see your tears."

Snap Erases Gain as Facebook Adds Camera Features [WSJ]

And it seems that - so far - the thirst (if not the basic fundamentals) is genuine.

While we've made our opinion of SNAPcrystal clear, we admit that we have no real idea how this whole thing is going to turn out in the long-term. But it turns out that neither does Snap's founder and CEO.

According to an interview with the Los Angeles Times, Snap's fearless 26-year-old leader Evan Spiegel is super-psyched about his IPO and thinks you should be mad pumped for buying it, bro. He's just gonna need like half a decade to explain why...

Stock market analysts have questioned why Snap went public at 6 years old with nascent revenue-generation and increasing losses. Spiegel said he sees a benefit in having the company’s value determined by public markets as he and Murphy try to grow the business.
They recognize there’s a disconnect between how investors and much of the public want to see Snap evolve — preferably something as ubiquitous as Facebook — and the path they see the business taking. Facebook has reached immense value by connecting 1.9 billion people to its social network, but Spiegel believes Snap could become just as valuable by building a smaller, more personal service.
“We built our business on creativity,” Spiegel said. “And we’re going to have to go through an education process for the next five years to explain to people how our users and that creativity creates value.”

So yeah it's gonna take like five years or so to show people the value of Snapchat. And we can't see anything wrong with that plan what with the public market being so fond of waiting quarter after quarter for a company with no history of profitability to demonstrate an intrinsic value.

Aside from Amazon, no one pulls off the "Coming soon: Money" trick for very long. Remember Twitter?...

SolarCity?

And -dare we say it again - Etsy?

But one thing that people saddled with those stocks had that Snap investors won't is an ability to officially complain about how terribly they think things are going.

Here's some insight from the LA Times piece into how Speigel views his shareholders:

And [Speigel is] dubious about concerns that Snap can’t continue to add new users. Though some investors may be closely watching user growth, Spiegel wants them to focus on how and how much users are interacting with the service.
“We’d rather inspire creation because we know a derivative of that is growth,” he said, noting that his head might still be in pitching-to-investors mode.

And Speigel isn't just recommending that shareholders focus on what he wants them to focus on, he's making it impossible for them to change the subject by restricting the vast majority of Snap shares from coming with voting rights. In fact, all Class C shares (A and B are available only to founders and early investors) purchased during the IPO were bought with the understanding that you will never vote on how Snap does business.

As we've said before, tech bros have been pushing the frontiers of shutting up shareholders for years now, but Speigel's codification of shareholder silence is unprecedented. So without precedent in fact, that the SEC is now pondering if it's cool with the idea of a 26-year-old who lost more than half a billion dollars last year alone doling out ball gags with every share purchase agreement:

An investor committee that advises the U.S. Securities and Exchange Commission will next week review if Snap Inc's decision to deny shareholders voting rights might also reduce the social media company's public disclosures on executive pay and other governance matters, the head of that committee told Reuters on Wednesday.

Essentially, the SEC is wondering aloud if Snap really gets, like, how a public company works or whatever.

Snap insiders and early investors hold shares with voting rights, giving them control of the company.
For Snap, "The question becomes, since there are no common shareholders' proxy votes to do, what does that do to the level of disclosures it will have to do for annual meetings and annual reports," Kurt Schacht said in a telephone interview.
Schacht is chairman of the SEC's Investor Advisory Committee, which makes recommendations to the regulator and was set up by the 2010 Dodd-Frank financial reforms. The SEC does not have to follow its suggestions. Schacht is managing director of the CFA Institute, which accredits investment professionals.
The committee has a meeting scheduled for March 9 that will include a discussion on "unequal voting rights of common shares," according to a published agenda for the session.

So now we're left to sit back and think "What the fuck is even happening here?"

In a BreakingView column published earlier today, Rob Cox gave our favorite answer to what we just saw:

Investors have effectively just done what no self-respecting person ever should: wear sweatpants in public. With Snap's $3.4 billion initial public offering they have simply given up giving a damn. They handed their money over to an immature company and in the process abrogated their rights to fair treatment, good governance and reasonable valuations. If the $24 billion self-styled "camera company" run by a 26-year-old fails to achieve its ambitions, shareholders have only their capitulated selves to blame.

Amen brother. We'd hit you up on Snap to tell you how much we love this but - like most of Wall Street - we don't know how it works.

Exclusive interview: Snapchat founders Evan Spiegel and Bobby Murphy discuss historic IPO and company's next steps [LA Times]
Exclusive: SEC advisory committee to question Snap's transparency for investors [Reuters]
Cox: Snap IPO marks moment investors donned sweats [BreakingViews]

10 months later, the villagers were force to admit that they never really understood the IPO. The thing they thought they liked was never real, and the thing they bought was a different thing altogether. It was a thing that lived entirely at the whimsy of a larger thing that could destroy it whenever the mood struck. It was also a thing that seemed allergic to profits, and much more interested in global economic activism than flinty-eyed capitalism. Because of all the misunderstandings, the villagers now owned a thing that 75% less valuable than the day it was born.

That, my children, is the story of Etsy. With illustrations!

If you look closely, you can see the waning (and quasi-waxing for a moment there) interest in Etsy stock. We wrote extensively about how Etsy was not what people thought it was, and no one paid us any heed. At this very moment, Etsy is worth about just less than half of what it was the moment it began trading.

So listen up schmendricks, we're gonna do this again, and we want you to listen good this time: Snap is Etsy, but instead of selling you handwoven boobie pillows, it lets you look like a dog and then makes your pictures and video disappear.

But, to be fair, instead of losing $15 million in the year leading up to its IPO, like Etsy did, Snap lost almost $515 million. And while Snap doesn't have to carry around the constant existential dread of being obliterated for sport by the monolith that is Amazon - which could replicate Etsy and blow it up with a light effort - Snap does have to carry around the constant existential dread of being obliterated by Facebook.

Back in the innocent days of April 2015, we were very clear that we thought Etsy was a goofy but solid company. An online flea market that cultivated the cache of a Brooklyn hipster Amazon, generating about $200 million in annual sales on goods that they didn't even incur costs to create while also fostering a genuinely altruistic corporate culture. That's was not too shabby. But it was also not the makings of a $2 billion public company.

Snapchat is the accidental lovechild of Facebook and Twitter, an "ephemeral messaging" app created with the functionality of keeping nude selfies from being etched in the permanent online history of Millennials the world over. It had the visual connectivity appeal of Mark Zuckerberg's monster with the added value of of Jack Dorsey-ian immediacy. At the time of Etsy's IPO, Snapchat was the unanimous choice of tech's "Next Big Thing," and it's retained that title for probably too long. While the company has managed to spend the last few years making a celebrity of its CEO, constructing an excruciatingly cool office compound in Venice Beach and toying with sublimely ridiculous new business model ideas, it has seemingly not spent nearly enough time on truly preparing itself for going public.

And because it's not ready, Snap is acting like it's not ready. In another fun similarity to its Brooklyn cousin, Snap is trying to make itself an exception to some of the accepted rules in the IPO game. Much like Etsy hiring Goldman Sachs and Morgan Stanley but also registering as a B Corp. and then trying to curate small batches of its offering to let normal folks get a piece (a bizarre situation that resulted in the unendurably lame spectacle of Goldman handing out Etsy friendship bracelets to attendees of SXSW), Snap is trying to have its IPO both ways. By offering a three-tiered class structure Snap is essentially looking to make about $3 billion while simultaneously preventing anyone from outside the company gaining voting rights. Tech founders have been moving towards tamping down shareholder voting power for awhile now, but Evan Spiegel and his bros are offering NONE votes. That's ballsy as hell for a company that lost more than half a billion dollars last year and still has major questions going forward.

[But if Snap pulls this off though, we can already imagine a near future in which Travis Kalanick goes full Nero on the Uber IPO, offering stock with negative voting rights and putting his dog on the board.]

But back to Snap's "questions"; Like Twitter (yikes), Snap's biggest selling point is its user base and the projected growth of said user base. But like Twitter, is it though?

What Snapchat does is cool, but it's not hard to copy. Just ask Facebook, who offered $3 billion for Snapchat back in the day, was rebuffed and has recently decided to just replicate the ephemeral pic and video thing on Instagram. It's been great...for Facebook. In fact, just the other day Silicon Valley tastemaker Owen Williams wrote this on Medium:

We’ve all moved to Instagram Stories. I never thought I’d do it, but eventually, as I used it more, I found Instagram’s rip-off of Snapchat to be more authentic. Suddenly, instead of checking one app for beautifully manicured photos, and the other for raw feeds, I could get everything in one place… and it actually worked better.

According to multiple reports, Instagram Stories is now boasting 150 million daily users since launching in September. In June, Snapchat reported that it had 150 million users. Those numbers seem to indicate that there is some bleeding coming from Snap, and that bleeding is likely to only get worse now that Facebook has replicated the stories function for its already wildly popular WhatsApp.

And even if Snap wasn't seeing user growth plateau, you would be hard-pressed to find someone who has a confident and nuanced vision of how Snap would monetize those users going forward. It could be an amazing ad platform, sure. And people might jus decided that they want to get the news from the same place that they send their dick pics from, but there is hardly enough bedrock certainty in those plans upon which to build a $20 billion IPO valuation.

If we think back to April 2015, we remember a lot of musing over whether Etsy was Amazon or eBay. It's not unlike watching today's consternation over Snap being Facebook or Twitter. But despite the different options, the answer is still the same; "It's neither." Like Etsy, Snap is its own thing and it should be evaluated as such lest another village of hopeful simpletons end up with shares in a troubled company that they never understood in the first place.

But as the LA-based tech startup predicated on the notion of making nude selfies ephemeral nears its listing date, people are starting to look at SNAP with an arched eyebrow...and SNAP is apparently feeling the shameful heat of their gaze:

Snap Inc., owner of the popular messaging app Snapchat, set a lower-than-expected valuation range on Thursday, amid mounting investor concern over its unproven business model, slowing growth and tight founder control.
The company, which filed for an initial public offering earlier this month, was widely expected to be valued at between $20 billion and $25 billion. However it said on Thursday it was targeting a valuation between $19.5 billion and $22.3 billion, ahead of an investor roadshow due to start on Monday in London.

Some of that tempered enthusiasm might have been caused by a look at this, Twitter's stock performance since IPO:

Yikes.

While Snap is a different animal than Twitter or Facebook or even Instagram (which recently stole Snap's girl by essentially replicating Snap's user experience with "Instagram Stories") there is something hauntingly familiar about Snap's financial situation.

Snap, which is going public at a much earlier stage in its development than Twitter or Facebook, saw its loss widen to $514.64 million in 2016 from $372.89 million a year earlier. While not rare for a young company to be unprofitable, it is less common for an unprofitable company only five years old to ask for as whopping a valuation as Snap is aiming for.

But also - like - unfamiliar?

With Snap's estimated valuation expected to be around 49 times revenue, and Facebook's being 27 times, the IPO aspirations "stress how much Snap’s post-IPO growth must exceed Facebook’s to compensate for its lack of short-term profitability" said Magnan at Duff & Phelps.
Snap generates most of its revenue from advertising and will pay Google $2 billion over the next five years to use its cloud computing services.

And factoring in that Snap's almost unprecedented IPO structure keeps voting rights from shareholders and keeps them concentrated in the hands of its founders. So if you're thinking of buying stock in SNAP, you're essentially gambling on the notion that a few 20-something guys with no history of making their massive user base profitable will somehow figure it out on their own with a bunch of your money and none of your input.

But while the whole picture is troubling, perhaps SNAP's acknowledgement that it's not worth as much as it thought it was is a good sign. Not often you see a tech startup admit even the hint of doubt, even if it is a sucking money Sarlacc pit.

Snap lowers valuation expectations in highly awaited IPO [Reuters]

So...you wanna buy some Snap stock?

Messaging app Snapchat has filed confidentially for an initial public offering (IPO), sources familiar with the situation said on Tuesday.
The Venice, California-based company is in the process of planning one of the biggest technology IPOs in recent years, expected to come as early as March.
Snapchat, whose parent is Snap Inc, was not immediately available to comment.

You don't what Snap does or how it plans to generate revenue (and since Evan Speigel is filing confidentially, we know he's fersure got less than $1 billion)? Who cares! Nothing has meaning!

You're concerned that President Trump will punish tech sector stocks? He also said that he was going to build a wall.

You're just not ready to pay premiums for shares in a company that was born out of the need to make nude selfies disappear after being shared? Have you looked at America lately? We're more than halfway to a dick pic-based economy!

Snapchat is really going public... buy gold.

Exclusive: Snapchat has filed confidentially for its IPO - sources [Reuters]

Snapchat has chosen bankers for its initial public offering, which could happen as soon as March, according to people familiar with the matter.
Morgan Stanley and Goldman Sachs Group Inc. will lead the offering and were notified of their role early this week, said the people, who asked not to be named because the information isn’t public.

It's not like you can't go public without hiring Goldman and Morgan to head up your super-hyped IPO, but also you really can't. Hiring anyone else is just not done. Like, you could hire Citi to take your tech unicorn public, but you could also get a full-back tattoo of Mike Pence's face while vaping meth at the Gathering of the Juggalos. Wall Street essentially sees no real difference between those two decisions anyway.

Spiegel gets it, you guys.

So Snapchat is following the axiom of modern IPOs even if it's not strictly a company that has a logical business plan.

See you soon, 2017!

Snapchat Said to Pick Morgan Stanley, Goldman Sachs to Lead IPO [Bloomberg]

Snap Inc. is working on an initial public offering that could value the popular virtual-messaging company at $25 billion or more, in what would be one of the highest-profile debuts in years.
The company, formerly known as Snapchat, is preparing the paperwork for an IPO with a view toward selling the shares as early as late March, according to several people familiar with the matter. There is no guarantee the four-year-old Venice, Calif., company will proceed with a share sale on that time frame or what its valuation might be.

That's right kiddos, big sexy tech IPOs are BACK! It feels like forever since we've seen huge valuation numbers thrown at companies that the vast majority of Wall Street only vaguely understands.

Like, how long has it been since you've seen something like this in the WSJ?:

In 2015, the company generated just $60 million in revenue. It isn’t clear whether Snap is profitable.

So good.

And even better is the notion that financial services professionals are about to start going apeshit over defining how to value a company created to make sexting safer and which now does... advertising? Social media marketing? Customized investment strategy advising? Hahaha... who fucking knows? Let's get this thing listed!!!

In fact, the rumors of what Snap would do with profits from an IPO don't seem that different from watching a nouveau riche tween geek hitting the dream mall after downing a speedball and case of Red Bull...

Snap could use some of the proceeds from an IPO as currency for acquisitions in so-called augmented-reality or virtual-reality, one of the people said. Snap recently changed its name from Snapchat as it moves from the main app for which it is known, which makes virtual messages disappear and is especially popular with teenagers. As part of that transformation, Snap recently said it would release its first hardware product, sunglasses known as Spectacles that are equipped with a wireless video camera.

Well that's... what's the opposite of clarifying?

And in keeping with the beautifully balls-out vaingloriousness of Snapchat's "business plan," the company is pumping up their IPO while running around bank-less.

Snap hasn’t hired any banks as it works on a public filing, known as an S-1, people familiar with the matter said.

Somewhere at 200 West Street there are more than a few people reading those words and giggling, but we would love to be in the room when the brozillionaire extrordinaire that is Snap CEO Evan Spiegel sits down with his bankers in the next few week and "talks big picture."

The future's so bright, we've got to wear...hideous Spectacles made by Snapchat, because maybe that's what the company does now.

Snapchat Parent Working on IPO Valuing Firm at $25 Billion or More [WSJ]

Cool?

Then let's do this.

The premiere of Season 3 seems to indicate that we'll be dealing with a "Wandering founder" narrative this year. After all, the story of a founder being stripped of his CEO credentials by rapacious money people only to reclaim his throne years later and build a massive company is basically what Joseph Campbell would have come up with if he'd lived in modern-day Palo Alto.

At the end of last season, Pied Piper founder/CEO Richard Hendricks had wrested full control of his startup from the legal clutches of his former employer, Hooli ("not Google") and it's quasi-evil CEO, Gavin Belson. Unfortunately, in the confusion, Richard has lost control of his own company to his own VC firm, Raviga Capital.

After being told the news, Richard flips out and calls and emergency late night meeting with Raviga, his partner Erlich Bachman, and his bro-tastic corporate counsel, Ron LaFlamme. On the way to the meeting, his car hits a robotic deer being tested by Stanford robotic nerds and Erlich physically attacks it... because "Silicon Valley" is a great show.

When Richard finally arrives at Raviga Capital - the totally realistic tech venture firm run entirely by women - he is forced to hear what Steve Jobs, Jack Dorsey and Elon Musk must have heard in the early days of their careers. “Essentially, you’ve created a company too valuable for you to run,” says annoyingly spectrum-riding Raviga CEO Laurie Bream. Richard is then offered the title of CTO, sending him into a maelstrom of geek rage.

Richard storms from the office and back to his home/startup incubator/office. In the morning he pleads his case to the other Raviga character, Monica. In Richard's angry rant to Monica, "Silicon Valley" makes it clear that it has a new writer this season. While defending his leadership skills, Richard admits that he's f@cked up, but that he's committed to learning and getting better, concluding "I'll even go to one of those CEO coaches like that guy at fucking Twitter."

That could be newly-hired "Silicon Valley" writer Dick Costolo taking a shot at his old tormentor, Jack Dorsey. Jack was known to have been coached up by famed CEO coach Bill Campbell in the early days of Twitter.

But Richard's pleas fail to gain any traction and he continues on with his founder's tantrum. Raviga offers Richard chance to pick new CEO which he snottily rejects, leading to the second possible Bill Campbell reference when Raviga hires "Action" Jack Barker to run Pied Piper. Barker is a middle-aged Unicorn shepherd with a sterling resume and some huge IPOs. His hiring only serves to worsen Richard's tailspin.

In anger, Richard takes an interview to be CTO of Flutterbeam, a Snapchat-esque outfit led by a pair of Evan Spiegel types who say things like "We raised a shit-ton of money and we're growing fast as balls but we're not exactly super psyched with the quality of our engineering." And they need a major talent infusion because they're working on a super-dope, yet buggy, chat filter that lets users wear fake mustaches.

Richard becomes immediately despondent with the notion of "Stache-Mode Alpha" and helping these bros shorten their "Stache-lag" in time for Movember.

In the end, he drives out to "Action" Jack's ranch where he is disarmed by the veteran executives basic humanity and efficacy. The unraveling of his un-matured ego has begun.

Other tidbits:

• When Gavin Belson “bravely” fires the entire "Nucleus" division instead of himself, Hooli stock surges and Valley types call it “The gutsiest thing” that they've ever seen.
• Belson gets carried away and decides to fire 1 in 4 employees, even paying out a $20 million severance to Richard's erstwhile buddy, "Big Head."
• There is no sign of Russ Hanneman, the insane yet eerily realistic billionaire played beautifully in Season 2 by Chris Diamantopoulos. But we will not abandon hope.