According to a recent Harris Poll of 1,006 adults aged 18 to 27, 47% wish that TikTok had never been invented. Most of those surveyed are regular users of social media, with 62% spending at least four hours a day on social media.

 TikTok isn’t the only social media platform whose existence many Gen Z-ers regret. Thirty-seven percent said they wish Facebook had never been invented, 43% feel the same way about Snapchat, and 50% wish X/Twitter had never been invented.

Challenge to TikTok Ban-or-Sale Law Faces First Amendment Scrutiny at DC Circuit [National Law Journal]
Opinion | Gen Z Has Regrets [The New York Times]

For more of the latest in litigation, regulation, deals and financial services trends, sign up for Finance Docket, a partnership between Breaking Media publications Above the Law and Dealbreaker. 

If you are over the age of 19, there is a good chance you’ve never heard of Charli D’Amelio.

Let us fill you in.

A 16-year-old from the suburbs of Connecticut, D’Amelio just passed the 100 million follower threshold on TikTok.

TikTok Magic

With no prior fame or glamorous family background to jumpstart her trajectory, D’Amelio first started posting lip-sync videos on TikTok in May of 2019 - just 18 months ago.

Today, she is by far the biggest star on TikTok and is one of only three “creators” to have eclipsed the 50 million mark. For reference:

On YouTube, it took 14 years before any individual channel hit 100 million subscribers. D’Amelio’s following dwarfs that of well-known celebrities who are active on the platform. Dwayne, “The Rock” Johnson, has less than 30 million followers. Mark Cuban, a regular TikToker, less than half a million.

How Does She Do It? Analysts say her mass appeal comes from being “relatable” and “authentic.” A columnist at CNET wrote, “it’s clear she has tapped into the authenticity that TikTok users crave.”

For example - earlier this year her TikTok bio read: "Don't worry, I don't get the hype either."

And D’Amelio is quickly becoming big business. This year she has 1) made her film debut 2) appeared in a Super Bowl commercial 3) had a Dunkin' Donuts drink named after her 4) launched a nail polish line 5) and is about to launch her first book: Essentially Charli: The Ultimate Guide to Keeping It Real.

All told, Forbes estimated she has earned $4 million this year.

Why It Matters: For social media platforms - the power of mega stars cannot be underestimated. Snapchat announced yesterday it will create a fund to pay its top creators $1 million per day to keep them on the platform.

So breathtakingly batshit is the tainted love of Adam Neumann and Masayoshi Son that it seems to have laid bare to all just how out-of-control stupid the global private equity scene has become. The fallout from the Dada surrealism of Neumann being paid $1.7 billion to walk away from something worth $8 billion after he spent $19 billion to make everyone believe it was worth $47 billion is so mindbendingly absurd that Wall Street appears genuinely disgusted and borderline-fascists are tweeting about their sudden interest in socialism. 

WeWork's failure to go public has sent such a shockwave through the culture that the bad IPOs from recent years seem to be getting re-reevaluated. Take, for instance, Snap. Remember when the SEC opened an investigation into the Snap IPO based on the wonky regulatory premise of "But how did anyone not stop this?"

Well, good news for Evan Spiegel! Adam Neumann just made you look small-time, bruh!

Snap Inc said on Wednesday that the U.S Department of Justice and the Securities and Exchange Commission were no longer investigating whether the company misled investors at the time of its March 2017 initial public offering.

Thanks to WeWork, the SEC appears to have a firm grasp on the concept that everyone is pretty much insane with IPO lust these days. At least Snap made the weak effort to pretend that it would one day make a profit.

Snap says DOJ, SEC drop probe on IPO disclosures [Reuters]

*[In keeping with the allegory, they will be sitting in a co-working space with their rescue chinchillas drinking cannabis-infused kombucha.]

This guy:

Snap shares were soaring in after-hours trade Tuesday after the company reported better-than-expected financial results. 

"Soaring?" you ask? Well, yes, because when you lower a limbo stick od expectations low enough, everyone is suddenly limber:

The social media giant reported a net loss of 4 cents per share which was less than consensus estimates of a 8 per share net loss during Q4.

Snap reported revenue of $389.8 million which was better than analysts’ predictions of $377.5 million.

Active users, a key industry metric, remained unchanged from the previous quarter despite competition from rival social companies continuing to heat up. Snap had 186 million daily active users in Q4. Analysts were expecting daily active users to decline by 1.5 million.

And Snap also hasn't murdered anyone, so...that's gotta be accretive.

Hey, maybe we're being too snarky. Maybe this is the inflection point for SNAP. Maybe there is a growth story here that we missed and will shock us all.

Snap’s biggest rival Facebook revealed during its earnings report last week that Instagram Stories now has 500 million daily active users.

Or maybe the algos are making you all fucking insane.

Snap's Q4 wasn't as bad as expected, shares spike [YahooFinance]

(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.

Well, other than us...

Since debuting at about $27 a share in early 2017, SNAP shares have dropped off in such a dramatic way that a chart of its total performance looks like the visual representation of a long, wet fart sound effect

Aside from having no fully-realized revenue plan, disappointing growth and living under the existential threat of Facebook, Snap is also hemorrhaging executives and becoming uncool very quickly.

Suffice to say a little too late that SNAP's entrance into the public markets now looks like a true contender for the IPO Hall of Shame. The whole thing has been a shitshow embarrassment that would have been spectacularly unique in its failure had Blue Apron not taken a real shot at stealing its thunder. With the stock price down by just over 75% in less than two years, and with no hope in sight, it felt like things could not get worse for Snap...but that feeling was wrong:

The U.S. Justice Department and Securities and Exchange Commission have subpoenaed Snap Inc. for information about its March 2017 initial public offering, the social media app maker told Reuters on Tuesday.

That's right, the SEC is basically investigating why the SNAP IPO was ever a thing that happened.

The previously unreported federal inquiries follow an ongoing shareholder lawsuit in which investors allege that Snap misled the public about how competition from Facebook Inc’s Instagram service had affected the company’s growth.
Snap said it believes that the federal regulators “are investigating issues related to the previously disclosed allegations asserted in the class action about our IPO disclosures.”
“While we do not have complete visibility into these investigations, our understanding is that the DOJ is likely focused on IPO disclosures relating to competition from Instagram,” the company said.

We don't have complete visibility into this either, nor any cogent understanding of securities law, but we are pretty sure that we're watching the actual SEC spending actual time and effort looking into how Snap convinced anyone to buy its stock while Facebook existed. So batshit is the notion that anyone would bet on SNAP right now that the government wants to make sure Snap investors are just dumb and not the victims of a mind trick that made them believe there was no such thing as Facebook.

For real.

We're not even making this up, and that's embarrassing.

Exclusive: Snap reveals U.S. subpoenas on IPO disclosures [Reuters]

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]

This sent Snap shares up because it could potentially resolve the revenue problems that the social media company has been facing since its inception.

Visual product search could make Snapchat’s camera a more general purpose tool for seeing and navigating the world, rather than just a social media maker. It could differentiate Snapchat from Instagram, whose clone of Snapchat Stories now has more than twice the users and a six times faster growth rate than the original. And if Snapchat has worked out an affiliate referrals deal with Amazon, it could open a new revenue stream. That’s something Snap Inc. direly needs after posting a $385 million loss last quarter and missing revenue estimates by $14 million.

But as many of us know, tech is a vicious industry where predators can swoop in at any moment to challenge your company. Enter Zuck.

Facebook is getting into the augmented reality (AR) advertising business, entering a space previously dominated by Snap.

Facebook announced Tuesday that it would begin offering AR ads in the News Feed. People will be able to use their mobile device's camera to participate in the experiences

Oh, Zuck, you cheeky, Napoleonic little shit. You're on a roll. You passed Warren Buffet in net worth this week. Facebook is at an all-time high. And that still isn't enough. Not even 24 hours after we discover that Snap is going to get into the AR retail game, you swoop in like Kanye West at an award show to steal the spotlight from the people over at Snap.

Although Zuck is a fierce opponent, don't expect Snap to take this lying down.

Snap has been the king of AR for a while now and the only thing stopping them from becoming a dominant social media and tech companies is the inability to monetize. Although they've integrated advertisements, filters and an eerily creepy, Big Brother-esque facial recognition system, they haven't turned a profit. However, they are clearly taking a step in the right direction by partnering with Amazon, and if they make money off of this partnership, their platform has potential to catapult itself into the tech VIP suite.

So, what happens next?

Who is going to outplay who?

No one knows the answers yet, but we do know that the competition is heating up like Michael Beasley taking three-point shots after doing some cocaine in the locker room. There has been a little beef between the two ever since Instagram and Facebook introduced stories, filters, sales in stories and pretty much everything else that Snapchat came up with first.

But this time, instead of competing for a place that millennials use to share regrettable videos, pictures the food they could barely afford or 1,000 seconds worth of shitty concert footage, the platforms will be competing in the retail space.

One Facebook AR ad test from Michael Kors let people try on a pair of their sunglasses virtually. Sephora, NYX Professional Makeup, Bobbi Brown, Pottery Barn, Wayfair and King will debut experiences this summer.

It looks like Facebook is focusing on fashion and furniture. Snapchat is looking to partner with Amazon which sells... well, everything. Which leads me to believe that these platforms have the potential to coexist, just as they have since Facebook started copying Snapchat's ideas.

We have reason to believe that Facebook may be looking to carve its niche in fashion because Instagram recently announced it will allow items to be sold through its Instagram stories. Logically, the next step will be for Instagram users to "try on" these prospective items with Facebook's AR platform, which are a change of pace from Snapchat Lenses. Although the Lenses allow people to purchase products directly from the app, the AR filters don't allow the customers to try the products on in the way that the new Facebook AR model does in the Michael Kors ad. If Instagram and Facebook are able to utilize AR properly and boost retail through the influencers on the social media site, they can become unstoppable in the world of online fashion retail.

It's Snapchat's turn now. Maybe they'll be able to specialize in selling all the obscure daily items that you might need outside of fashion and furniture, but who knows? After all, someone found that hidden feature within Snapchat's code, not in a Snap Inc. press release.

Snapchat Code Reveals Team Up With Amazon for 'Camera Search' [Tech Crunch]

You can now buy products directly inside Snapchat [CNBC]

You can now click on items featured in Instagram Stories to buy them [CNBC]

Facebook is adding AR ads, threatening Snap's dominance in the space [CNBC]

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.

"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]

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]

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]

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.

Per CNBC:

"We had a good start to 2017," Zuckerberg said in a statement with Wednesday's earnings release. "We're continuing to build tools to support a strong global community."
The social media platform makes most of its money by connecting advertisers to its massive user base. It earned $7.86 billion in advertising revenue, up 51 percent from a year ago, and higher than the $7.68 billion expected by a StreetAccount estimate. Average revenue per user was $4.23, higher than the $4.17 expected by StreetAccount.

Facebook also added 80 million monthly users in Q1 2017 and beat estimates on both metrics of user growth.

But all of those bug numbers are somewhat eclipsed by this single line in Facebook's release:

"Facebook is no longer reporting non-GAAP expenses, income, tax rate, and earnings per share (EPS)"

Using GAAP accounting in Silicon Valley is - for lack of an appropriate term - baller. For an industry almost predicated on gently fudging numbers, going GAAP is Zuck and Sheryl Sandberg throwing down the gauntlet and telling Wall Street, Sand Hill Road and everyone in between that Facebook is done pretending that it's not a corporate titan on par with Goldman, Google and Amazon. Right now, Facebook shares are slipping because the company missed on EPS, but it's not hard to fathom that Facebook wouldn't have missed using Non-GAAP and continuing to pretend like stock options aren't a huge part how Facebook acquires and retains talent.

Going GAAP is Zuckerberg saying "We're done fucking around with fucking around...and also that Snapchat stock some of you are holding is now the most expensive toilet paper you've ever bought."

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

Evidently bankers at Jefferies haven't been listening. On Thursday Britain's Financial Conduct Authority fined former Jefferies investment banking MD Christopher Niehaus nearly $50,000 for putting client info on blast using WhatsApp. The offenses occurred “on a number of occasions,” regulators announced, none of which involved a profit motive of any sort.

“The information was shared by Mr Niehaus because he wanted to impress the people that he shared the information with,” the FCA said.

In one instance the banker boasted about how he might be able to pay off his mortgage should a deal be successful. “Wish I could go exercise but waiting for [Client One] — story of my life . . . size will increase significantly if I pull off my deal”, he wrote in one message on May 16.

Some of the boasts were a little more sensitive than others:

One time Niehaus told his friend, who was also a client, at a social gathering in April 2016 that a competitor of the friend was about to complete a rights issue. After the information became public in May, Niehaus messaged his friend and said the client had “c[o]me out with a profit warning” and was “in trouble.”

Niehaus told the FCA he "didn’t know" why he disclosed the information other than he wanted to impress his friends.

The illicit texts apparently came to light during an unrelated investigation, and Niehaus readily admitted to his blunder before resigning.

So yes, the literal crime here was broadcasting privileged information about clients to friends who had no reason to view it. But the real sin was using WhatsApp, of all things, to do it. This was early 2016, mind you, before the sadists at Facebook had rolled out the Snap-slaying disappearing photo feature on WhatsApp. So that option was foreclosed to Niehaus. But Snap wasn't.

Former banker fined for sharing information on WhatsApp [FT]
Ex-Jefferies Banker's WhatsApp Boast Leads to FCA App Fine [Bloomberg]

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]

If none of that seems all that convincing, try this on: Buy Snap 'cause why the hell not.

That argument seems to be the implicit message behind the selfie app's biggest coup yet as a publicly traded company: receiving its first buy rating. The judgment from the boutique investment firm Monness, Crespi, Hardt & Co., which sees Snap rising from its current $20 range to around $25, means that no longer are credulous day-trading millennials the primary force buoying Snap's shares. Now a Wall Street dude says so, too:

Key to his argument is the idea that Snap thinks of itself as a “camera company.” While this self-description made for a tough sell to investors on Snap’s pre-IPO roadshow, Mr. Barry says it’s pivotal for Snap’s future success.

“What’s important to understand about Snap is that the end goal is much more than animal ears superimposed on images,” Mr. Barry writes, a reference to the gimmicky filters that Snapchat users can put on their photos. Rather, he says that Snap is best thought of as a “software-enabled portal” that “takes users to a decision tree on what to make of the captured memory.”

If that sounds like just the sort of impenetrable flim-flam that has propped up the early and unsustainable prices of tech Icaruses from Etsy to GoPro, well, it kind of is. Then again, the IPOs of Facebook and Google came drenched in waves of relentless technobabble as well, so who knows. The least we can expect is a strong measure of confidence in the analysts assigning the rating. Right?

"We recognize we are potentially giving too much credit for unproven skills in building a business, rather than just a product, but we see more to Snap than many suggest," Monness wrote in a note on Monday.

"There is substantial execution risk, but we’re prepared to give the benefit of the doubt at this stage knowing what we know about Snap, and knowing what we know about the efforts of competitors."

That's quite a few caveats for a buy rating! When “benefit of the doubt” enters into an investment thesis, it's probably time to just stick with the doubt. Then again, if you're giving credence to a buy rating faced with five holds and six sells, you're probably aware of the risk you're taking.

It's actually pretty refreshing to see a buy rating premised on a shrug. History is replete with surefire bets built on an edifice of quantitative insights suddenly crumbling when the foundation those numbers relied on turned out to be faulty. Why-the-hell-not seems a far more honest justification than “decision trees” and “software-enabled portals” and all that.

Regardless, if CEO Evan Spiegel is to be believed, Snap investors can go ahead and wait half a decade before expecting any sort of certainty about the company's viability. That gives us all plenty of time for groundless speculation, which is obviously where the action is anyway.

At Least One Analyst Thinks Investors Ought to Buy Snap [WSJ]
Snapchat finally has its first 'buy' rating from Wall Street [BI]

The list of sacred things profaned by millennials is a long one, ranging from napkins to diamonds to sex. But one of the keenest blows the generation has landed on the American way of life has been their reluctance to bet on the stock market. Partly for lack of funds, partly out of suspicion of Wall Street, millennials have kept their speculating to a minimum. That's a problem. How can the gears of the public markets continue to turn without an inexhaustible supply of credulous traders willing to hand over profits to the better-informed?

Luckily, Robinhood is up for the challenge. In the days after Snap Inc's ludicrously overblown IPO, Robinhood, the almost-free mobile trading app beloved by millennials, recorded a massive surge in trading, with 43 percent of its users active that day loading up on fresh new Snap shares. From USA Today:

“Snap’s IPO revitalized investing among the younger generation,” notes Baiju Bhatt, the co-founder of Robinhood, whose core audience is primarily 18-24. “We also saw a surge in new accounts, with many new customers opening up their first brokerage account."

The median age of Robinhood investors buying Snap on Robinhood has been 26, the same age as Snap CEO Evan Spiegel.

It's no surprise to see Snap, the unabashed thirst trap of the stock market, gaining favor so heavily among young investors. Here's one of them:

Chris Stearns, 30, who lives near Virginia Beach, bought 13 shares Friday morning because he sees Snap as the next Facebook. “Snap is the first IPO-centric stock I’ve taken,” he says. “It’s a huge growth opportunity." Stearns, who works with his dad putting in glass in homes and businesses, says that every person he’s hired over the past few years in their 20s was always on Snapchat. “They use it constantly.”

Here's another:

Ryan Eshagi, an 18-year-old freshman at the University of California, Irvine, said he became "addicted" to the app when he was in eighth grade. "It defined the way teens and young adults communicate with one another," he says. He bought 20 shares, financed by his part-time job helping high school students with college applications, and plans to hold onto the shares for quite some time.

Like Twitter and Etsy before it, Snap has earned itself a customer base loyal and demographically appealing enough to distract investors from the fact that the company isn't really making all that much money. And like those two august predecessors, Snap's shares have begun tanking now that the IPO euphoria has worn off. In the long run, obviously, it's too soon to tell how Snap will fare. But in the short run, it seems Snap's IPO did exactly what it needed to do: deliver short-term gains to pros who have already sold off and counted their winnings.

Any trader who had good fortune selling the Snap pop should thank Robinhood for providing a surge of eager millennial buyers. “Our mission,” the app boasts, “is to democratize access to the financial markets … 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.”

While it's hard to quibble with notion that stock ownership is essential to retirement planning, the idea that frictionless retail stock trading will boost the financial fortunes of the meek warrants scrutiny. Most day traders lose money, get discouraged, and quit. All Robinhood has done is provide a sleeker and cheaper way for the naive to hand over their cash, as Snap's IPO has illustrated.

This isn't to fault Robinhood's product, just its purportedly egalitarian branding. Its namesake, as we all know, took from the rich and gave to the poor. Robinhood's disruptive innovation seems to be persuading the poor to unknowingly hand their money over to the rich.

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!

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]

After working at Theranos Inc. for eight months, Tyler Shultz decided he had seen enough. On April 11, 2014, he emailed company founder Elizabeth Holmes to complain that Theranos had doctored research and ignored failed quality-control checks. The reply was withering. Ms. Holmes forwarded the email to Theranos President Sunny Balwani, who belittled Mr. Shultz’s grasp of basic mathematics and his knowledge of laboratory science, and then took a swipe at his relationship with George Shultz, the former secretary of state and a Theranos director.

Goldman Sachs, Bank to the Elite, Makes Pitch to the Masses (NYT)

The ad campaign’s 15- and 30-second video ads, which will appear on Facebook, Hulu, Pandora and YouTube, depict debt as an unavoidable nuisance of modern life, not shameful overspending on unaffordable luxuries. A car gets a cracked windshield while parked at a Little League game. A couch gets chewed up by a new puppy. A child gets new braces. Or a water heater springs a leak. “Debt happens. It’s how you get out that counts,” the ads say.

JPMorgan To Pay $200m-plus Fine For Hiring ‘Princelings’ (FT)

Princelings are technically the children of high-ranking Communist party officials but the term is often applied to the sons and daughters of China’s elite more generally. JPMorgan had made several high-profile hires, including Gao Jue, son of a Chinese commerce minister, later employed by Goldman Sachs, and Tang Xiaoning, son of a former bank regulator who went on to chair Everbright Group.

RBS Rejected Goldman, Deloitte Warning Over 2008 Cash Call, Lawsuit Alleges (Reuters)

Just hours before Royal Bank of Scotland launched a massive cash call in 2008 to shore up its capital, the bank's senior advisers were still discussing whether its financial figures were potentially misleading for investors, court documents allege.

Yellen Will Talk Trump in Thursday's Testimony (BBG)

Federal Reserve Chair Janet Yellen will probably be quizzed about how President-elect Donald Trump’s fiscal policies might affect the economic outlook and path for rate increases when she gives congressional testimony Thursday. Don’t expect a clear answer.

Fed's Kashkari Says The Trump Market Rally Is Helping Policymakers On Rates

Minneapolis Federal Reserve President Neel Kashkari told CNBC on Thursday the reaction in financial markets to Donald Trump's victory — rallies in stocks and bond yields — is making the job of central bankers easier.

Snapchat Revenue Growth May Not Be A Snap (Reuters)

The bulls are likely to cite eMarketer's report from September, which predicts that Snapchat's revenue will rise 155 percent to $935.5 million in 2017 from $366.7 million. The downside to those numbers is that while Snapchat accounts for 32 percent of social network users in the United States, it's only getting 2.3 percent of social network ad dollars.

In China, Toilets Have Trump’s Name Without His Permission (NYT)

Zhong Jiye, the founder, said he had not heard of Donald J. Trump when he registered the English name of his company, Shenzhen Trump Industrial Company Limited, as a trademark in 2002. In Chinese, the company name means “innovate universally,” he said, highlighting how the toilet seats warm and wash the user’s backside. That Chinese name, he explained, also sounds a little like “trump.”

A Perfume that Smells Like Poop? By Bill Gates (GatesNotes.com)

I recently traveled to Switzerland to take a giant whiff of pit latrine odor. What I inhaled was a strong kick to the nostrils, a potent combination of sewage stink, barnyard sweat, and bitter ammonia topped off with vomit (or was it parmesan cheese?). The stench was foul and made me wince.

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]