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]

Missing on revenue, EPS and user growth is no way to go through life, and Snap stock took an epic nosedive as Wall Street digested the reality that Snap is showing virtually no signs of growth or competent management. The situation was not improved when Snap also announced that it was releasing Snap Spectacles 2.0, a relaunch of a product that was widely hated and mocked. Bringing back Spectacles is the equivalent of Eddie Murphy attempting to resuscitate his film career by self-financing "The Adventures of Pluto Nash 2."

All in all, Snap's most recent financial report was a vomitous buttfumble that has resulted in a 24% loss in SNAP's value. So, Snap's CE-brO Evan Speigel was left with only one option; Kill his CFO.

Snap chief financial officer Drew Vollero is stepping down on May 15, to be replaced by Amazon's Tim Stone, a key transition for a company that has struggled to find its footing since going public last year.

Throwing Vollero into a volcano is not a surprising move - it's hard to survive a quarter like the one SNAP just pooped out (or it's intrinsic nature) - but bringing in a guy like Stone (who oversaw the impressive Whole Foods integration) appears to be a pretty stellar get for Speigel and his team. But then again things can't get worse at Snap, so maybe Stone sees an opportunity so Spiegel won't have to overpay...

Fifty-one-year-old Stone will have a salary of $500,000, restricted stock units with a value of $20,000,000 and 500,000 in options, subject to time-based vesting.

Nevermind.

And while all the chatter will be that Stone can "Speaka da Wall Street," giving Speigel a secret weapon in his crusade to make bankers understand how slow growth and massive loses are creating value, we cannot fathom how hard it will be to go from the juggernaut that is Amazon to the carrion of confusion that is Snap.

But, um, congrats and best of luck to Tim Stone!

Snap CFO Drew Vollero is stepping down on May 15, Amazon's Tim Stone to replace him [CNBC]

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.

At first blush, the action on MongoDB stock for Day One makes us look as dumb as ever:

That's not too shabby at all. It's also possibly an indicator that enough people actually understand what MongoDB does and that at least a handful of Millennial analysts survived their bullish calls on Snap to sell their confused bosses on "Open-Source." According to Forbes, it's even a sign from the Market Gods that Silicon Alley will be redeemed despite the sins of Etsy and Blue Apron.

So, like, yay?

We like MongoDB as a company. It's something of a pioneer in its very lucrative - and relatively low-cost - space, and it's by all accounts a well-run operation. While we might come off as soulless wonders who feed emotionally on the failure of others, we are genuinely pleased for MongoDB's stellar first six hours of life on the public market.

But...it's also just day one.

There is plenty of time for us to realize that no one actually understands what MongoDB does, and that many of those surviving Millennial analysts are operating from an instinct of panic and recommending MDB on a wing and a prayer. And we're mere weeks away from MongoDB reporting an operating loss in its first fiscal quarter, confusing investors who thought it was "like, a platform or something?" Essentially, nothing about this is different than the disasters that preceded it.

Being misunderstood on day one is a rite of passage for new tech IPOs. Etsy stock almost doubled on its first day. Snap finished up 44%, well above what MongoDB just did. Even Blue Apron traded up by a solitary cent on its debut. That one cent turned out to be irrational exuberance.

If we've learned anything from this recent spat of tech IPOs (Spoiler Alert: we haven't) it's that the first day is not only meaningless, but potentially a contraindicator. People get overly excited about stocks all time, but that doesn't mean for a moment that they will remain turgid for potential upside when they start to realize that they don't really know what they're looking at.

MongoDB is a stronger business than Etsy, Snap or even Blue Apron (evil giggle), but it's also way more difficult to understand than any of them despite the similarity of being not profitable. Maybe the market is actually bullish about MongoDB, but it very well might just be getting its head turned by the newest prospect in the dingy singles bar that is the NASDAQ.

We hate to be a fucking wet blanket, but maybe the best thing about MongoDB's trading day is that it was only up

Silver lining!

Juicero was wonderful. It was an under-ideated, overpriced and essentially useless product created by a man who's only previous business venture ended in total failure. It also pulled down $120 million in Silicon Valley venture funding, because the universe likes a giggle.

The folks behind Juicero clearly understood that there is a secret pot of gold at the meeting point of health fads, luxury goods, confident bullshitting and "tech." But what the same people most definitely failed to realize was that when you get caught hawking a pretty $700 machine that is only capable of doing what your human fist can do, you don't run away...you go public.

Etsy, Snapchat and Blue Apron have all proven that you don't need to be smart, ready or even feasible to go public in today's market. You just need Goldman Sachs and Morgan Stanley to sign some shit and introduce you to Tom Farley. Then you ring a bell and, like, money comes out.

Abracadabra, you're rich! And the shareholders...well, let's not dwell on details.

We're not saying that Juicero screwed the proverbial pooch here, but this was part of the reasoning behind shutting down that the company laid out in a statement:

In order to fulfill our mission, we announced last month that we would shift our resources to focus on lowering the price of the Press and Produce Packs. We began identifying ways that we could source, manufacture and distribute at a lower cost to consumers.
During this process, it became clear that creating an effective manufacturing and distribution system for a nationwide customer base requires infrastructure that we cannot achieve on our own as a standalone business. We are confident that to truly have the long-term impact we want to make, we need to focus on finding an acquirer with an existing national fresh food supply chain who can carry forward the Juicero mission.

Umm, this is a first quarter results letter, you plebes. In today's world you don't give up because your business has collapsed in on itself in the most fundamental of ways. You get yourself a ticker symbol, give everyone as little information as possible, and use whatever you raise to plug the holes before you "pivot." And you'll be fine because no one sells voting shares anymore, just the kind that offer exposure wihtout rights.

You didn't need to die, Juicero. You had so much left to take as a terrible public company.

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]

"They were all running, packed close together. They passed along and up the street toward the bull-ring and behind them came more men running faster, and then some stragglers who were really running. Behind them was a little bare space, and then the bulls galloping, tossing their heads up and down. It all went out of sight around the corner. One man fell, rolled to the gutter, and lay quiet. But the bulls went right on and did not notice him. They were all running together."

Ernest Hemingway, The Sun Also Rises (1926)

It has been said that there is nothing so terrifying as a stampede. A breathtakingly dangerous mass of life charging en masse, creating terror by evincing the result of terror itself. The earth shakes and the mind trembles, a churn of legs and power moves like a wave, trampling whatever is in its path.

Luckily for most of the world, stampedes are rare. And in the world of finance they are even rarer still. Which makes the anticipation of Monday all the more exciting...

Snap's so-called share lockup period ends on Monday, potentially allowing early investors in the March IPO to unload hundreds of millions of shares on an already wary market.

The most dangerous place to be on Wall Street at the beginning of next week will be in front of anyone with a sell order on SNAP. Not only will most of the company's early investors be looking to unload their shares, they'll be racing to do it as quickly as possible. When it comes to the price of SNAP shares, time is of the essence. Just look:

We envision trading on SNAP Monday morning to look like a brutal human disaster, people trampling over each other to get out of a stock that should never have been created. And we can't even take solace in the fact that underwriters will be the ones feeling the life pushed out of them by the repeated blows of feet destroying their solar plexus. It could be anyone really.

But when the dust settles and Snap is worth just enough to allow Zuckerberg an evil giggle, we will all be able to look into the carnage and learn a lesson about absurdist valuation and the darkness that lives inside us all. What we learn will serve us well when the lockup period ends on Blue Apron.

Snap shares fall as investors brace for potential wave of insider selling beginning next week [CNBC]

Every few months the financial press is obligated to roll out anothershortfeature on Robinhood, the app that, in the name of economic justice and wealth redistribution, makes day trading easier for millennials. This time around it was the Financial Times, whose Tom Braithwaite stopped by the startup's Palo Alto office to get their well-told story. It was Occupy Wall Street, recall, that inspired founder Baiju Bhatt to help strapped millennials become petit-capitalists. Robinhood charges no commissions and makes money mostly from selling premium accounts that allow margin trading. It's a unicorn.

There was one telling scene in the story, though:

As he struggles to find a can of soft drink in a mini fridge stuffed with beer, Mr Bhatt makes a passionate pitch — unusual among today’s Silicon Valley founders — for the benefits of going public. “I think all of these companies staying private for as long as they are is actually pretty bad. Companies should go public and they shouldn’t raise $7bn before they do,” he says. “I think it would be really cool.”

One could read this as a declaration of Robinhood's own ambition to go public. But more likely it's a simple statement of fact for the founders: Big flashy tech IPOs are great for Robinhood. Recall that when Snap IPO'd, millennials poured into Robinhood. Here's what Bhatt said back in March:

“Snap’s IPO revitalized investing among the younger generation...We also saw a surge in new accounts, with many new customers opening up their first brokerage account.”

Funny how that works. Thanks to millennials eagerly buying a bunch of ludicrously overhyped IPO shares from savvy Wall Street underwriters, we're one step closer to a fairer and more just world. Just to be sure, let's check how all those new accountholders have done since they downloaded Robinhood and loaded up on SNAP:

To be sure, it's perfectly cool for Robinhood subsidize a free day trading platform with returns generated by charging margin investors. One could argue that the per-trade cost frictions that E*Trade or Schwab users face tamp down on ill-advised small-beans speculation of the sort that a free platform might encourage. But the actual effects remain to be seen. As a Robinhood spokesman told me earlier this year:

Re: the idea people are bad stock-pickers and prone to day-trading, we actually don't see that behavior. Many of our investors are buy and hold investors, creating mini-diversified portfolios overtime - though a fraction of our users are more active, experienced day-traders. In addition to all U.S. stocks, we also offer the entire suite of ETFs.

As co-founder Vlad Tenev told Business Insider recently, the lack of commissions encourages users to diversify into a bunch of stocks rather than pile into a few.

What's less defensible is the continued Occupy-style social-justice framing here. The problem isn't so much wanton speculation as the idea that leaping into the public offering of the app you use to send dick picks is somehow a financially prudent decision. If Robinhood's mission is just to make money offering cheap day trading to people who know the risks they're taking, fine. But that's not their ostensible mission. This is:

Our mission is to empower this new generation to take greater ownership in their financial future, which we believe can help shrink the gap between the "haves" and the "have nots" and lead to a healthier, more robust global economy.

It would be great to live in a world where we're just a few more Blue Aprons and Snaps away from generational wealth parity. But alas.

Free stock trading for millennials comes at a cost [FT]

Oh dear god!

So it turns out that having no real revenue plan and a business model that Mark Zuckerberg can copy in his sleep really is a not-so-great cocktail for public market success.

But, hey, it's still the early days. There's time to turn this around, especially since Evan Spiegel and his team have shown that they aren't totally devoid of ideas. Really all SNAP needs is a bleeding edge type of content strategy that Facebook would never try and has even notional monetization potential. Or at the very least something so brand new that people will at least start whispering about how creative Snapchat is being again. These guys have made millions of dick pics disappear, how hard can this really be?

Snapchat is getting its first daily news show in partnership with NBC News.
"Stay Tuned" will air at 7 a.m. and 4 p.m. on weekdays and 1 p.m. on weekends local time. The segments will be two to three minutes and include current news topics and pop culture events in the vein of "NBC Nightly News." There will also be breaking news segments when necessary.

Umm...really? Snap is going to pull of its death spiral by introducing Facebook-type live video...while simultaneously partnering with the dying legacy news business?

Cool cool.

"If something happens in the world, we want people to go to Snapchat," said Sean Mills, Snap's head of original content.

No, no, no. Please stop talking. We need a moment to process our thoughts.

NBC News hired 30 journalists to staff the series and will be leading ad sales, with an undisclosed revenue split with Snap, the parent company of Snapchat.

This will end in tears.

So what we see here is a bid for deeper engagement of current users that relies on a revenue share through a partnership with an organization so on the forefront of modern media success that it is now paying Megyn Kelly at least $15 million a year to do stuff no one is watching.

Suddenly those hideous sunglasses seem like a creative high point.

Pretty soon, Blue Apron is going to stop providing cover as the worst IPO around (or maybe ever) and people will start to take a real look at what Snap has done to turn things around. And they are not going to keep singing the "It's so cheap" song much longer unless they see something. Partnering with NBC News to get a foot in a business that no one can seem to succeed with is not the kind of shit you want to be showing them.

You can now watch your daily news on Snapchat [CNBC]

After incautiously warning potential investors that the company might never turn a profit due to its rather narrow market and cost-heavy business model, the company announced its IPO almost simultaneously against news of a mega-merger that threatened its very existence and then listed directly into the wrath of a mini-crash in tech stocks.

We've got to hand it to Blue Apron though, for it alone has expanded our understanding of the "Shitshow." It's not easy to create a chart like this, you guys:

And that was before this morning, before Jeff Bezos decided that merely tripping Blue Apron coming out of the gate wasn't enough, especially when he can cut the company's legs out from under it. And with this summer heat making us all a little nutty, Bezos has apparently decided to whip out the bonesaw.

Wanna see two paragraphs that encapsulate Blue Apron's nightmare come true?

Amazon is stepping up its assault on America’s $780bn grocery market with plans to deliver meal kits to customers’ homes.
The internet retailer has registered a trademark in the US for a new service called “We do the prep. You be the chef”. It will cover “prepared food kits... ready for assembly as a meal”, according to its application.

Amazon might as well have legally named this idea "Death to Blue Apron™" and cackled maniacally as it was filed.

It was hardly a secret that Amazon was intrigued with the "Recipe in a box" model, and that it had the infrastructure all ready to go with millions of Prime subscribers, monsoons of revenue and now Whole Foods, but registering a trademark for a legit foray into that space is tantamount to slapping a death warrant on Blue Apron's already hobbled stock price.

But don't take our word for it, take the market's:

What you're seeing hhere is the market hearing about Amazon's trademark, digesting the meaning of it, some quants trading the dip and then the sheer "fucked-ness" of Blue Apron overcoming that false bump.

Why Amazon would decide to twist the knife in Blue Apron now is unclear. Perhaps Bezos is shorting the stock and trying to get his portfolio to match the aggressively "swole" look that he is currently showing off at Sun Valley. Maybe there's an interest in getting Blue Apron down to a low enough valuation that Amazon can just scoop it up for cheap (unlikely what with the vast majority of Blue Apron subscribers likely already being Prime members and Amazon being notoriously disinterested in such acquisitions). There is also the slim possibility that Amazon was always planning to do things on this kind of timeline.

But we think we know the real reason; Jeff Bezos has been watching Mark Zuckerberg do his best Bezos-ian routine of slowly torturing a weaker business rival, cruelly strangling Snap by unsubtly showing the world that Facebook can do everything that Snapchat can do but better and while turning a profit. Bezos likely enjoys the whole "imitation as flattery" deal, but Bezos is now a jacked-up Northwest alpha male, unafraid to let the world know that he is the OG and will be respected as such. The best way to show Zuck that Bezos is still the king would be to knock off a weak company that dared to think Amazon would never be able to destroy it.

Unfortunately for Blue Apron, Bezos is a lion at his physical peak surveying the savannah for potential prey and the APRN stock performance is a three-legged antelope with its head in a watering hole, practically begging to be killed and eaten.

Amazon ready to cash in on boom in meal kits [The Times UK]

That's curious!

Now, three months and a billion-odd Snap trades later, Morgan Stanley analyst Brian Nowak has finally taken the time to reach deep within himself and connect with his true feelings on Snap:

“We have been wrong about Snap’s ability to innovate and improve its ad product this year,” Nowak wrote in a note to clients Tuesday. “Instagram has become more aggressive in competing for Snap’s ad dollars.”

As a result, Nowak said he expects to see Snap’s ad revenue growth being slower than previously expected. The firm is cutting its 2017-2018 revenue forecasts by 7 percent to 13 percent. Nowak lowered his recommendation on the stock to equal-weight from overweight and cut the price target to $16 from $28. Morgan Stanley was an underwriter on the Snap IPO.

In the aftermath of the note Tuesday, Snap finally fell below its IPO price of $17.

It's heartening to see Nowak has come around to the truth that has been staring us in the face all along, but his reasoning remains unconvincing. Snap's ability to capitalize on the ad front was indeed an open question leading up to the IPO, but the notion that Facebook (via Instagram) is a novel concern may be a bit harder to swallow. It was evident that Facebook was roughhousing with its upstart competitor before the IPO; afterwards the relationship became more of a bloodsport.

Elsewhere the mood on Snap is far grimmer. Here's a good one:

“With market fears running rampant around Snap’s DAU growth, the lock-up expirations this summer and increased competition from Facebook, sentiment around Snap remains at ghastly levels,” Brian White, a Drexel Hamilton LLC analyst, wrote in a June 29 note, referring to daily active users.

But hey, there's still the dancing hot dog.

Snap Slips Below IPO Price, Gets Downgraded by Morgan Stanley [BBG]

Shares of Snap Inc. dropped 4.5 percent on Thursday and briefly touched its initial public offering price, highlighting investors' loss of confidence in the social media company that faces fierce competition from Facebook.
The stock of the owner of Snapchat - a mobile app that lets users capture video and pictures that self-destruct after a few seconds - momentarily traded at $17.00 on Thursday, the price in its March initial public offering that was the hottest U.S. technology listing in years.

And please, take this moment tell us all about how tech stocks snap back because they're just too hyped and not ready to live on their own yet. Snap isn't buttfumbling life as a public company because it's learning to be a public company, it's because Snap is, for all intents and purposes, a private company with a stock ticker.

You've essentially got the bros who started it, refused to sell it to Facebook, forgot to somehow protect themselves from Facebook's wrath, without ever building a genuine revenue engine, still making all decisions free from any shareholder input. It's a recipe for disaster that's already been mise en place-d...and the oven is preheated.

Which is perhaps why a lot of people are acting as if they really don't think Snap is snapping back:

Since May, the interest rate that short sellers pay to borrow shares of Snap has jumped to 42 percent a year, according to Astec Analytics. Some insiders in Snap's IPO will be free to sell their shares at the end of July, increasing the supply available to short sellers.
The Advisor Shares Ranger Equity Bear ETF made money selling Snap after its IPO and buying the shares back after its disappointing quarterly report.
Portfolio manager Brad Lamensdorf said he would consider shorting Snap again once more shares hit the market.
"Its price-to-sales ratio is just so freaking high," Lamensdorf said.

Listen, there's a lot going on in the world right now and we're all just a little too overwhelmed to take on more psychic baggage. So why don't we all just save ourselves the time and energy of slowing Snap's inevitable slide into life as a $5 stock for day traders?

Snap's stock price sinks to IPO price [Reuters]

JPMorgan cut its 2017 share price target for Snap from $20 to $18 on Monday, sending shares lower by more than 2 percent.
In a note to investors, JPMorgan maintained its neutral rating for the parent of social media site Snapchat.
While "engagement is strong" on the site, JPMorgan said it has several concerns, including the company's ability to scale its advertising business. It also said it's less bullish on Snapchat's ability to add users, fears competition from Facebook and is concerned about Snapchat's lack of profit. JPMorgan said it doesn't expect Snap to post a profit until 2020.

Slapping a "neutral" rating on SNAP is definitely a cautious move so early in the game, but it's not the kind of move that gets Jamie to give you one of those Jaguars from the lobby...

Snap slides on JPMorgan cut in price target for 2017 by $2 a share [CNBC]

Blue Apron Holdings Inc, the biggest U.S. meal kit company, has filed for an initial public offering, amid increasing competition as more companies seek to deliver fresh ingredients and recipes to subscribers.

Congrats, dipshits, Etsy and Snap had a baby and it wants to you to pay to cook your own dinner. And in case you weren't excited enough, business isn't even booming!

Blue Apron, named after the uniform that apprentice chefs wear in France, delivers prepackaged ingredients and recipes to subscribers' doorsteps for them to prepare at home, a business model attempting to disrupt traditional grocery shopping.
The company, founded in 2012, is not profitable. It lost $54.9 million last year but revenue more than doubled to $795.4 million, Blue Apron said in a filing with the U.S. Securities and Exchange Commission.
Blue Apron posted a net loss of $52.2 million for the first quarter of 2017 on revenue of $244.8 million.

So get psyched masochists, Blue Apron wants you to buy some stock but they want you to hold it way longer than people hold Blue Apron subscriptions:

And that might be hard considering Blue Apron can't give away stock for free at first or market to investors on The Howard Stern Show and/or every podcast in the world.

But then again Blue Apron doesn't need to see its stock perform too well out of the gate. See, Blue Apron is going public because it needs cash and the food delivery startup market is more crowded than a Deutsche Bank HR office on voluntary buyout day. With private money being harder and harder to come by (something a very intelligent reporter predicted would happen in this industry many moons ago), Blue Apron is hoping to raise its next round of funding from the same dupes who were dumb enough to buy ETSY and SNAP.

Speaking of Etsy, Blue Apron has the same genome of "Startup surviving at Amazon's whim." Should Jeff Bezos ever get truly serious about the "Recipe-in-a-box" business, he can apportion food from his ever-growing grocery concern, offer it as a Prime membership perk and burn Blue Apron to the ground in less than a fiscal quarter. Plus, Amazon can reach clientele outside the yuppified major cities that Blue Apron is forced to operate in based on its end-to-end business model.

And like Snap, "APRN" stockholders will have the same voting rights as the people who gave their money to Evan Spiegel before he set it on fire: ie None.

Going public does not mean that Blue Apron’s management is intent on giving up control of the company. The start-up will have three classes of stock: Class A shares that will be sold to the public and will carry one vote per share; Class B shares, which the founders and early investors own, which carry 10 votes per share; and Class C shares, which come with no voting rights and will be used for purposes like acquisitions.
As of now, the company’s biggest shareholders are Matthew B. Salzberg and Ilia M. Papas, the founders, who together own just under 40 percent of the class B shares, and the venture capital firms Bessemer Venture Partners and First Round Capital.

Blue Apron's IPO is essentially the dogshit Frankenstein of the new IPO market; an untested company that doesn't turn a profit, wants to keep operating like a private company, sees a ticker symbol as a Z-Round of funding, and will tank into penny stock territory after being restructured within a few quarters of public disclosures.

And like most of these companies, Blue Apron could have continued along quite happily as a niche food delivery startup if it hadn't gotten slapped with a ludicrous valuation years ago.

Who's hungry?

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]

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.

As the tech universe was being whimsically swept away by the largest IPO in LA history, my brain revisited a passage in Nick Bilton’s recent New York Timesreview of the books Valley of the Gods: A Silicon Valley Story Hardcover and The Kingdom of Happiness: Inside Tony Hsieh’s Zapponian Utopia:

"It isn't so much that I didn't like both of these books as much as I didn’t like the people in them,” Bilton writes. “They, frankly, come across as self-centered lunatics who are intent on making a dent in the universe, without an ounce of self-awareness for the repercussions of how those actions could harm others. While the books do have some skepticism, more often than not, they read as though the authors consider their subjects to be gods, not mere mortals who just happened to be good on the computers."

Just as Bilton says, days after Snap’s debut on the New York Stock Exchange, my news feed seemed to be working overtime in an attempt to solidify 26-year-old CEO Evan Spiegel’s status as the Demigod of Venice Beach. Armed with his fiancee supermodel Miranda Kerr, Spiegel and co-founder Bobby Murphy quickly rose to the top of tech’s kingdom with eyebrow-raising stories of supposed bravery and brashness. After all, these are the same whiz kids who turned down a $3 billion acquisition offer from Facebook in 2013 when Spiegel was just 23 years old, resulting in Forbes calling him “the brashest tech wunderkind since, well, [Mark] Zuckerberg.” But these are also the same guys who started a company that lost more than half a billion dollars last year. A company with no clear business plan or revenue model. A company that seems to have spent more time making a celebrity of its CEOthan preparing for a proper IPO.

And yet, the madness ensues and no one calls out these “lunatics” so-to-speak, mostly because everyone in Silicon Valley is busy catering to their own narcissism and lining their pockets with cash. Even the investors think they’re changing the world, while of course, getting rich in the process. And that’s exactly how tech nerds – not gods – tumble down from their happiness kingdom. Because there’s no vetting, we end up with dizzying consequences like once lauded biotech Theranos which, at one time, was said to revolutionize the $50 billion blood-testing industry. With just a microscopic drop of blood from the finger, instead of the typical venipuncture required, Theranos claimed it had developed blood analysis machines that could test for hundreds of diseases. Another I’m-changing-the-world-kind-of-business that was making a lot of people’s wallets very fat. In 2015, a year after Theranos struck up a goldmine of a partnership with Walgreens and CEO Elizabeth Holmes ended up on Fortune magazine’s cover, John Carreyrou of The Wall Street Journal published a front-page story alleging there was no proprietary technology, no revolutionizing of an industry, no $9 billion valuation. What there was was a sham of a company that used its competitors’ equipment and had major accuracy concerns. After being touted as the next Steve Jobs, Stanford drop-out Holmes’ world fell apart and federal prosecutors quickly came sniffing. Shortly after Carreyrou’s WSJ article, Walgreens bailed and federal regulations banned Holmes from owning or operating a medical facility for at least two years.

It’s mind boggling to think that there was no point in time while investors were busy pouring $400 million into the company did someone to say, “so, how does your technology work?” or even a “can I see your lab results?”

The similarity in all of these companies is that there’s no one willing to call out the bullshit. Everyone’s busy getting rich. Even when Snap's seemingly anti-reason meteor of a stock took a nosedive in its second week of trading, it bounced back on what felt like the wings of dreams to hit a new high in its third week of trading. So apparently even when we see the faults in companies like this, we just dig deeper into denial and create a new fantasy about the dashing young tech CEO.

As a society, we’ve committed this disastrous mea culpa time and time again, building someone up to instant bonafide celebrity status. We give them powers, and pretty soon, they start thinking they can do no wrong because they’re surrounded by yes men and women.

In Bilton’s review, he writes about these yes men and women. He writes about his frustration with Alexandra Wolfe, a reporter for the The Wall Street Journal, of her portrayal of Silicon Valley as “mystical and magical, worthy of a place in history and something akin to the Greek odes to Aphrodite and Dionysus” in her book Valley of the Gods. He questions Wolfe’s decision to laud billionaire Peter Thiel as a genius who made billions on companies like Spotify and Lyft, yet also failed to note that his hedge fund Clarium Capital “faltered badly with misplaced bets during the Great Recession, or that Thiel’s support for Donald Trump had made him largely persona non grata in Silicon Valley.”

Yes, we need intrepid leaders, willing to take ambitious risks to change the world, But more than anything else, we need someone ready to step forward and say, ‘What’s your business plan, bro?” the next time some whiz kid wants to drill through the center of our Earth. Let’s just hope we all snap out of it soon.

Vivian Giang is a business writer on workplace trends, women-focused industries, technology and the human brain...and whatever else she finds interesting about work and play.
You can find her on twitter @vivian_giang

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]

So it was a bit awkward when the debutante ball arrived and seven underwriters pranced out with the same “buy” rating. Goldman, Morgan Stanley, Jefferies, RBC, Cowen, and Credit Suisse all came out in green Monday. There were some zigs among the zags, however, including JPMorgan, which, despite its underwriter role, went with neutral:

"(The) neutral rating is driven by an increasingly competitive social media landscape which includes Facebook and others implementing successful Snap features across a broader user base, potentially weighing on user growth, and lack of profit until 2019E," JP Morgan analysts said.

That opinion put JPMorgan in line with the non-IPO banks that have rated Snap stock so far. Prior to Monday, Snap coverage consisted of included six “sells,” six “neutrals” and two “buys,” according to Reuters, with the rare positive ratings resting on the compelling logic of why-the-hell-not. But now with Snap's underwriters chiming in, the “buys” outnumber any other opinion. Here's a sampling of the bullish rationale:

• Morgan Stanley: “We believe Snap's millennial audience and differentiated online video ad inventory are in demand by advertisers, and Snap’s growing direct ad sales efforts, recently opened advertising [for third parties], and continued ad unit innovation will pull ad dollars toward their platform.”
• Goldman: “While this clearly carries a higher risk profile, we believe it also comes with higher reward potential. With Snap’s large, valuable, and highly engaged user base generating ad inventory and the monetization path in mobile now well worn, we believe the potential for outperformance as the company continues to innovate against the growing mobile opportunity outweighs those early stage risks.”
• “Snap has become an innovation leader -- for both consumers and advertisers – in arguably 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.”
• Citi: “This ain’t your parents’ camera company.”

In case you didn't catch that: Millennials use Snapchat! Such are the insights gleaned from participating in an IPO, apparently.

Snap shares spike after 5 bullish analysts say 'Buy' [Yahoo Finance]
Snap shares rise as underwriters start coverage with 'buy' [Reuters]
Wall Street Is Suddenly Bullish On Snap [Bloomberg]

WALL STREET: [rubs eyes] Holy shit, what happened here? I feel awful...Where are my pants?

SNAP: [sits up in bed] Morning lover.

WALL STREET: [clearly horrified by the look of SNAP in the light of day] Oh... yeah...Hi?

SNAP: Wanna go again?

WALL STREET: Umm...of course I would, it's just that I need to go to work...don't you have anywhere to be? Also, were you missing that many teeth at the club?

SNAP: Somewhere "to be?" On a weekday morning? Ha! Fat chance!

WALL STREET: Haha [doesn 't laugh] Well, I need to get to the office. Can I call you an Uber?

SNAP: [confused] Why? You asked me to move in after I mentioned that I'm between homes at the moment. Plus, I would never take Uber. That's a terrible company.

WALL STREET: "Between homes"?

SNAP: Yeah, I'm real homeless. Don't you remember me telling you that I lost more than half a billion dollars last year? You were snorting that 9th line...

WALL STREET: Half...a....billion? With a "B"?

SNAP: Umm, yeah! I'm TERRIBLE with money. To make it even worse, I have no idea how to make more! And again, thanks for paying off my credit card btw. 300 million is a real help.

WALL STREET: NOOOOOOOOOOOO!

In fact, if it wasn't for Uber CEO Travis Kalanick, Marissa Mayer and The Bible's Job, Cryan would feel very alone in the world. Days of joy are rare for Cryan, and rarer still are days of hope. So imagine - if you will - what might have transpired in his mind and heart yesterday and today as he watched Snap begin trading as a public company.

There before his eyes was an untested tech startup with a boy at the helm and hemorrhaging money as it IPO'ed. Snap has no clear revenue model, no real corporate structure that anyone understands, perhaps no understanding of how public companies even operate, and a five-year plan to prove that its stock is worth the paper its (technically) printed on.

And yet, Cryan couldn't help but notice, everyone was buying that scheiße.

It was...glorious. And it filled John Cryan with a feeling that he had not felt in some time; excitement. In fact, it turns out that Snap's illogically popular IPO gave John Cryan an idea...

Deutsche Bank confirms that it is conducting preparatory steps for a potential capital raise of approximately EUR 8 billion and several potential strategic measures. These include retaining Postbank and integrating it with the Bank’s existing German retail and commercial business and a sale of a minority stake in Deutsche Asset Management via an initial public offering. Implementation is subject to market conditions and approval by the Management Board and the Supervisory Board. At this stage, no decision to proceed has been made.

It's brilliant in its simplicity. If people will buy shares in a startup with an iffy reputation that loses hundreds of millions of dollars a year, they will surely buy shares in a famously loser-ish bank that loses slightly less...

You might just make it after all, Johnny C.

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]

Here are the elements of a successful thirst trap:

1. Be alluring. Put your best self in that selfie. Don’t be ashamed to include some cleavage or chest hair or whatever. But also...
2. Feign humility. Naked exhibitionism can be tempered by underselling yourself a little. At the very least append a little “lol” to the end of your caption. Eg, “in my dumb jammies lol.” Finally...
3. Go public. Throw caution to the wind, post that sucker and rack up the faves.

This isn’t just the playbook for millennials’ solemn ritual of mass-market flirtation, but precisely how Snap Inc. – i.e. Snapchat, i.e. the Mecca of thirst traps – has approached public markets. First the company positioned itself as the ultimate sexy startup, a hip melange of social-media influencers and horny teens. But on the eve of its IPO, Snap sold itself short, suggesting a price range of $14 to $16 a share, coyly undercutting expectations. Finally, following a deliriously oversubscribed share offering that brought the price up to $17, the company went public Thursday, drawing all the desperate attention of a truly shameless selfie.

As of writing, the stock is approaching $25 a share, nearly 50 percent above its pre-IPO price.

If Snap’s surge leaves you bewildered, understand the dynamics of a thirst trap. It’s not supposed to be subtle. The reaction isn’t supposed to be reasonable. It’s supposed to trigger an irresistible urge among bystanders to smash that “like” button, regardless of whether they know better. The crassest thirst traps, the ones that make you wonder who in their right mind would buy in, also happen to be the ones that generate the biggest response.

So it is with Snap. There’s no lesson here for investors, of course. We don’t need to throw a bunch of numbers at you about how Snap hasn’t drawn a profit or whatever. Maybe Snap really ought to be valued at more than CBS Corp. Or maybe it’s the Etsy of social media. Perhaps it’s the next Facebook. Perhaps it’s the next Vine. The important thing is the right people got the recognition they deserved.

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 for those who live in a marvelous fantasyland where Facebook doesn't exist, boy, has Goldman got a bridge some pre-IPO shares to sell you. From Business Insider's Rachael Levy, who talked to a guy:

Goldman Sachs, one of the lead banks on Snap's initial public offering, estimates that revenues for the social-media company could hit nearly $2 billion in 2018. That's nearly five times last year's sales.

[...] Snap is on the road this week meeting investors and a key question is how much the company, whose Snapchat app is known for its disappearing photos, can grow its user base. Goldman estimates that the company could grow its daily average users to 221 million in 2018, up from 158 million late last year

Goldman's numbers assume the daily active users metric to grow by about 4.3 percent quarterly over from 2016 to 2018. That's a conservative number when compared to the double-digit quarter-on-quarter growth that Snap has racked up in years past. But it would mark an acceleration from the fourth quarter of 2016, which saw daily active users grow by just 3.2 percent.

Snap blamed the dip in part on technical glitches, but there's plenty of reason to point the finger at the clone of Snap's Stories feature that Instagram rolled out in August. TechCrunch reported that the move helped depress view counts by as much as 40 percent for Snap celebrities. One talent manager warned that “Snapchat is making some of the same mistakes as Vine.” In perhaps the most worrying sign, DJ Khaled, hip hop's Stuart Smalley, has implored his Snapchat fans to migrate over to his Instagram.

The revenue picture is a bit murkier. Snap has been relatively cautious in pushing ads on users, and analysts are optimistic about the high engagement times among target demographics – 30 minutes a day amongst 20-year-olds, according to Snap. Even so, quintupling revenues in just two years while fending off the Death Star of the tech economy is a tall order. (For comparison, Facebook's revenue only doubled between 2011 and 2013.)

Presumably, Goldman is selling investors on the idea that Snap's impressive record of innovating and hooking users can top Facebook's even more impressive record of gobbling up innovations and making users clinically addicted. And maybe that's a good bet! People had the same qualms about Google eclipsing Facebook as the latter approached its IPO. Google Plus, we hardly knew ye.

But downplaying Facebook's existence is a tall order. Snap opens its IPO filing with the declaration “Snap Inc. is a camera company.” Given the credulity Goldman assumes of potential Snap investors, one has to wonder how many of them might take that statement literally.

Goldman Sachs is predicting that Snap will deliver $2 billion in revenue in 2018 [BI]

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]

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]