This Snapchat IPO might just be a waste of time and money

So Snap Inc. a.k.a Snapchat has just gone public and has risen almost 45% in stock value from its guide price of $17 a share to $25. So now, institutional and private investors are happy. Even happier are the two under-30 co-founders, Evan Spiegek and Bobby Murphy who now own more than the $3 billion that Mark Zuckerberg, Facebook CEO offered them in 2013 to buy the company. On paper. Forgive us for not spitting out rainbows about the digital Benjamins that seem to be raining on them right now.

Look, there’s even no need to filter this – we are not excited – period.

Sir Martin Sorrell can stay excited as he seems to believe that Snapchat is “very important” and may very well be “the third force”. He was probably referring to Google and Facebook as the first and second forces but we’ll add a kind “JK” to that for him this company for now has shown no promise of pulling off the abnormal and inexplicable successes that those two have in their long years of public service. Yes, service.

Apart from the fact that Snapchat has mostly recorded losses till date in its much shorter history, and it’s revenue – at it’s highest – has only ever being a fraction of Facebook’s and Google’s, these other company’s have thrived not just on a product. They have thrived on an idea/ideas that they have relentless redefined over the years to re-invent, re-package, further idealise through mind-boggling innovations that have seen them go from just anomalies to cross-industry innovators. How do you explain the move from search engines to self-driven engines?

That’s the difference right there. The thing that makes us so unexcited about all these flowery description of the beauty of the most expensive Tech public listing in over three years.

We are also not excited because once a company goes public, it means it has to reveal much more information about it’s businesses to the public. Four times a year, public businesses must release detailed performance data in earnings reports.  The only reports we direly need to read from Snap and the plans and moves Spiegel and Murphy are making towards re-inventing the App or living up to it’s claim to be the nexus between Tech and Entertainment. It’s really not just about offering an Oscars filter once a year.

We are not foolis though, we know not to be so sceptical that we’ll turn cynical. We have read all the stories about how rich we’d be by now if we’d  bought Google or Apple or Amazon stock at their IPOs. People were even more sceptical but look at these companies now. We are not unaware of how silly we may feel next year but facts available point us away from the direction of those basking in the halo of this incomplete story.

Our reservations stem from two main observations.

First, it’s just the nature of IPOs to be shiny at first.

While this Snap IPO has been kind to the company’s former private investors, employees, and the bankers who will run the offering and definitely, the founders, there’s enough reasons regular Joe investors like us would rather sit this one out.

A study of IPO returns by a University of Florida finance professor Jay Ritter, found that on average, investors in IPO stocks actually lag investors in similar companies — and lose money over the following five years after the offering. Even if a company does well after a rocky start, like Facebook back in 2012, individual investors might not be able to stick it out long enough to recover losses. Facebook lost $50 billion in value within four months of going public, devastating the returns of everyday folks while those who bet against Facebook got rich in the first few years.

Even Google which went public over 12 years ago and has made a lot of early investors very rich and happy by now had warned that its staff that got first dibs should not get so excited and heady as to go off on a spending spree and not to look so intensely at the stock ticker at work.

Obviously the story has changed and we’ll get to why soon enough but the lesson here is cliche but gold: not all that filters… In other words, investing in an IPO is almost like MMM – use only spare cash. None of which we have.

Secondly and more importantly, what makes a Tech company stand the test of time is actual and constant innovation and reinvention of the game

The App has definitely matured from just a platform for sending silly/secret captioned selfies into a media platform that advertisers are starting to take seriously. In the past year, Snap Inc. has built out channels where news partners can create mini mobile magazines of their site’s content – you’ll find Mashable and Buzzfeed really going viral there. But then the Instagram Story’s “see more” option has positively turned around the stress of “Link in bio” that made Instagram unfriendly as a traffic driving platform for the more serious digital magazines.

We can also talk about Snapchat compiling its users’ short videos into live coverage of events around the world but when you think of live coverage of events on social media, Snap isn’t the first thing that comes to mind.

If you’d rather reconsider the stress of live streaming on Youtube, Facebook Live is what you think of. It’s what the organisers of the last Miss Universe turned to for backstage and live red carpet coverage. There’s even extra credit for the Facebook Live’s ability to be posted on the timeline of users’ for future reference which has made it the preferred option for the tutorial-inclined influencers out there. And now even where the thing even being filmed is the kind that needs to disappear within 24 hours, you return again to Insta Story where all you audience aren’t divided on what App to really follow you on.

Or are talking about the Snap’s messaging function? There’s surely no need to even go here. WhatsApp has successfully sealed its place in the hearts of Instant Messaguing lovers. So much so that we fear there’s really nothing more for Blackberry Messenger when the Android BBs start to roll in. Now, with WhatsApp stories, Snap’s messaging/photo offer has a strong rival – one that also offers video call, broadcasts, group messages, business functions, replying and forwarding options.

Snapchat does have something that none of these other platforms offer – like sponsored lenses, the different filters that spice up selfies, those designed by brands and for specific events and we hear this IPO will make Snap much more energised to expand and pivot – but the question is expand how?

Because really, when we think of Snapchat, we think of a very niche product that has reached the peak of what it has to offer. Kind of like Twitter with all of its “so-not-exciting” updates that go from “What’s happening” to “What you missed” and then “Moments” without actually ever offering anything more than 140-charactered micro-blogging to the same old people. And Twitter has maintained a market capital of just 12 million Dollars with it’s still less than half a billion users. Snapchat by the way only reported 158 million users as at December last year.

So what are we talking about?

It’s not that Snap is all tired dog ears and no innovation. Far from it. The company has actually tried to distinguish itself as one ready to offer more. From turning down Facebook’s $3 billion offer in 2013 to maintaining a California base—and not in Silicon Valley—to physically position itself as truly different, Snap has actually done well so far. Like Google, it has even tried to branch into hardware production with its camera-equipped sunglasses, Spectacles. Spectacles by the way is a pair of sunglasses that can record video in short bursts.

Impressed? It’s actually pretty cool. Until you think of the hazardous eye/other injuries that may be followed with claims of damages against the company from trying high impact adventures with the Spectacles on.

Also, we have heard that after Spectacles, there are drones in the offing. But you know who already took flight last year and even made it to “Sub-saharan Africa” with a promise to make sure of world domination by providing access to internet to even you Grandma? yes, Zuckerberg! Google hasn’t exactly been slacking either in the hardware department with its Google Cars and Virtual Reality headsets that are thinking fr our future selves.

Maybe Snap does have more in the offing to achieve a real crowning glory. Maybe. We just can’t see it yet and so we aren’t impressed. Yet.

How much Dollars can you scrape up right now in Nigeria to buy worthwhile Snapstocks anyway?

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