Following Its Blockbuster IPO, Snap Now Faces Some Growing Pains

Following Its Blockbuster IPO, Snap Now Faces Some Growing Pains

Wall Street is still seemingly abuzz with excitement after Snap made its blockbuster debut on the New York Stock Exchange on Thursday, marking the first tech IPO to go public this year. 

With a market cap of more than $30 billion, Snap is now more valuable than Twitter and Viacom, and isn’t far behind eBay and Tesla Motors. The company now has about $2.3 billion in cash to use for acquisitions, new hires, product development or whatever else it chooses to do. 

Snap has hired a number account executives — employees who manage and seek out brand partnerships and other business opportunities — leading up to its IPO. The company is also seeking to hire more than a dozen ad-related positions ranging from sales operations associates and marketing managers to product managers. 

 The Street

Snap Inc. set to price its IPO at $17 per share

Snap, the parent company of the social network Snapchat, priced its initial public offering at $17 a share — above the expected $14 to $16 a share range.

The oversubscribed IPO, which will begin trading on the New York Stock Exchange on Thursday morning, is valued at $24 billion.

It’s likely to be the biggest tech IPO this year, Wall Street watchers say.

“We’re not sure there will be any other whoppers this year,” Everett Wallace of Triton Research said.

Snap’s marketing of itself as not only a social network, but a company that makes wearable technology, cameras and glasses pits it against some more established
companies, Wallace said.

“You could buy Twitter and Fitbit and GoPro and Warby Parker and still have $6 billion left over to buy the USS George Herbert Walker Bush, a nuclear aircraft carrier” Wallace said.

New york post

Snap IPO boils down to one question: Do you trust Evan Spiegel?

Investors in the coming initial public offering of Snap Inc. will buy into an unprecedented corporate governance structure that won’t give them a voice, instead placing all the power in a pair of 20-something executives who have not proven they are worthy of such trust.

Buying shares in Snap amounts to a risky bet on the two co-founders, Chief Executive Evan Spiegel, 26, and Chief Technology Officer Robert Murphy, 28. The two former Stanford University fraternity brothers have a combined 88.6% of the voting power in the company, which will not be diluted because the shares issued in the IPO will have absolutely no voting power.

“They have the full suite of protections for management and the historic owners, plus the unprecedented protection that the stock they are selling to the public is nonvoting,” said Rett Wallace, co-founder and CEO of Triton in New York, which provides data and analysis on private companies.

“A cynic would say they are almost anticipating unhappy shareholders, as they have made unprecedented efforts to remove the levers uppity shareholders pull to express themselves,” Wallace of Triton said. “If they thought it was going to be a rough ride, they have prepared themselves very well to ride it out.”

MarketWatch

Snap bets on hardware as Facebook threat looms

Snap Inc takes to the road in London on Monday to promote its initial public offering with a daring proposition: that it can build hot-selling hardware gadgets and ad-friendly software features fast enough to stay one step ahead of Facebook.

Snap’s IPO filing reads “as if all the hard things in front of them that they have to do are already done,” said Rett Wallace, cofounder and chief executive at Triton Research. But, he said, that’s not the case. “How will they hold up against all the guys you don’t want to be fighting against in the world – Facebook, Google and Apple?”

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Snap’s IPO Roadshow: What You Need to Know

With Snap Inc. set to roadshow its IPO, Triton CEO Rett Wallace joins Paul Vigna, Stephen Grocer and Maureen Farrell to break down everything you need to know if you’re thinking of buying stock.

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Will Snap Pop? Investors Seem Skeptical

Snap Inc., parent of the hot disappearing-message app Snapchat, has a lofty valuation, hordes of coveted young users and social cachet. It also has a lot of Wall Street investors who aren’t buying the hype.

Many are concerned about slowing user growth, particularly since the rapid rise in popularity of the Snapchat social-messaging platform has been a top justification for the company’s valuation.

“The argument here is, ‘We’re going to build this huge audience and monetization will follow,’” said Rett Wallace, chief executive at Triton Research LLC, whose firm collects and analyzes data on companies. He added that before looking at Snap’s prospectus, many investors were hoping for answers about how to make money off Snapchat’s growing user base. Now there is a question about whether Snap can build that huge audience, he said.

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Research analysts culled at top investment banks

Snapchat: Worries before the stock exchange

Investors hesitate with the entry, because the advertising possibilities on Snapchat are unclear

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Can Snapchat’s Culture of Secrecy Survive an IPO?

Investors who buy into public offerings know it’s riskier to bet on a company with a shorter financial history. That’s why the IPO process is so critical: It’s the coming-out party when the company unveils why it’s worth owning the stock. Potential investors will come to Snapchat with more skepticism.  The last major social media debut, Twitter Inc., generated a lot of excitement on Wall Street, but the company’s later performance proved that a popular, influential product doesn’t necessarily indicate long-term revenue and user growth.

“Investors learned their lesson with Twitter,” said Rett Wallace, CEO at Triton Research Inc., which analyzes Silicon Valley companies preparing IPOs. “They now know what metrics to ask about.”

Bloomberg technology

In Snap IPO, New Investors to Get Zero Votes While Founders Keep Control

Like many technology entrepreneurs, the founders of Snap Inc. want to retain management control of the virtual-messaging company, even as they sell shares to the public.

In one respect, the men are going further than tech firms typically do: Investors won’t get any voting power with shares purchased in Snap’s initial public offering, according to people familiar with the matter.

The recent scarcity of tech IPOs could work in Mr. Spiegel’s favor. In 2016, 26 technology companies went public on U.S. exchanges, raising $4.3 billion, the lowest number and dollar volume since 2009, according to Dealogic.

“If you’re the only supply in the market, you’re well positioned to dictate the terms,” said Triton Research LLC Chief Executive Rett Wallace, whose firm collects and analyzes data on private companies.

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Nutanix stock spike signals juice back in tech IPOs

Tech darling Nutanix more than doubled on its first day of trading — the latest signal that Wall Street bankers are pricing initial public offerings aggressively to keep deals moving.

“Bankers are happy to get this stuff moving and get a pop — it makes it that much easier to do the next deal,” says Anthony Evans of Triton Research, a New York-based firm focused on tech IPOs.

“Meanwhile, the companies need money because they’re burning through cash,” Evans said.

New york post

Startups Cash Out Before IPOs as Venture Capitalists Turn Pickier

With venture capitalists growing pickier, the IPO market largely shut, and investors newly insistent that startups operate in the black, flush corporations are providing lucrative paydays for some startups that once had grander ambitions.

GM’s Alliance With Lyft Facing Rockier Road After Uber-Didi Deal

General Motors Co. and Lyft Inc. are going to have a lot harder time wringing benefits from their newly minted partnership now that their biggest ride-sharing rivals just formed an alliance of their own in the world’s largest economy. 

Earlier this year, GM poured $500 million into Lyft, half of a $1 billion round that valued the San Francisco-based startup at $5.5 billion. Just months before, Lyft had received a $100 million check from Didi Chuxing, China’s biggest ride-hailing business, solidifying an arrangement that would have helped both companies battle their shared global competitor, Uber Technologies Inc.

That all but dissolved this week when Didi and Uber joined forces for a $35 billion alliance in China. With it, Uber got $1 billion in cash that it can now use to focus on the U.S. market, where GM is counting on Lyft’s rapid growth to give it a real presence in the emerging business of ride sharing.

Bloomberg technology

Uber’s China Deal Moves Ride-Hail Giant a Step Closer to IPO

Uber Technologies Inc. just took a big step toward being ready for an initial public offering: bailing out of its China business by selling the unit to ride-hailing competitor Didi Chuxing.

While Uber Chief Executive Officer Travis Kalanick has said he plans to wait as long as possible before going public, throttling losses in China was one of the main things holding up a potential IPO, people familiar with the matter said last month. Uber had been spending at least $1 billion a year to fight market-leader Didi in the Beijing-based company’s home market, and has already lost $2 billion in China, separate people familiar with the details have said.

Rett Wallace, chief executive officer at Triton Research Inc., which analyzes Silicon Valley companies preparing an IPO, said the deal with Didi provides closure to a costly and uncertain battle in China.

“Resolution of the land war in Asia will be a big comfort to all investors, existing and prospective,” Wallace said. “Eliminating the losses is great for the profit and loss statement, but more importantly, there is now certainty about the end of what was shaping up to be an endless and escalating capital need.”

Bloomberg technology

C.E.O.s Meet in Secret Over the Sorry State of Public Companies

…About a dozen chief executives of investment firms…arrived for a meeting that they were told they would absolutely have to keep secret.

The agenda…was to discuss the sorry state of publicly traded companies: too little trust and connection between shareholders and management, too many rules imposed by so-called governance experts and too many idiosyncratic accounting guidelines. As a result, much of the smart money in the United States is going — and staying — private, creating more companies that have less public accountability and transparency.

Twilio IPO shows there’s still some tech love on Wall Street

Shares of Twilio — a tech “unicorn” that was privately valued at about $1.23 billion — nearly doubled its market cap to $2.36 billion in its Thursday debut on the New York Stock Exchange.

The San Francisco-based startup — which powers anonymous text-messaging and phone calls for mobile apps like WhatsApp, Uber and Lyft — saw its shares surge nearly 92 percent, to $28.79, at the close of regular trading.

Despite the impressive one-day gain, Twilio’s relatively modest size limits its reliability as a bellwether for the tech IPO market ahead, warns Rett Wallace of New York-based Triton Research.

“Twilio is now one-tenth the size of Airbnb,” Wallace noted, referring to the home-sharing site recently valued at $24 billion on the private markets.

Still, Wallace said Twilio’s good news may augur well for Line, a Japan-based messaging app that’s aiming for a $5 billion valuation next month in dual listings on the New York and Tokyo stock exchanges.

New york post

Twilio’s Success Is the Exception, Not the Rule, in Today’s IPO Market

Twilio’s (TWLO) market debut Thursday far surpassed expectations but the IPO market still hasn’t come to life.

Twilio priced at $15 per share, ahead of the $12 to $14 range it provided, raising $150 million. The stock opened Thursday at $23.99, or 59.9% above the IPO price. Shares closed $28.79, up 92%.

While venture capital backers Bessemer Venture Partners, Union Square Ventures and Fidelity are probably pleased with the strong exit, more such debuts are unlikely in the near term.

“A lot of people are trying to force that story” that the tech IPO market has recovered, Kaylan Tildsley of Triton Research said in a phone interview. “Twilio is the third tech debut of the year, and the first of the traditional venture-backed Silicon Valley mold.”

“At the end of the day, Twilio is a good company,” she said. Triton assigned it a rating of 7.2 out of 10, ahead of the firm’s average rating of 6.5 “Solid growth, solid management, Goldman [ Sachs] brought it public” as one of the lead underwriters along with JPMorgan.

The Street

Twilio Jumps in Trading Debut After Pricing IPO Above Range

The second venture capital-backed technology company to go public this year, Twilio Inc., surged in its U.S. stock market debut.

The company’s initial public offering got off to a strong start. Twilio, the maker of mobile and web applications backed by Bessemer Venture Partners, sold 10 million Class A shares for $15 apiece, more than the $12 to $14 marketed range. The stock climbed as much as 73 percent to $26 on Thursday, after opening at $23.99.

While it may not trigger a slew of new listings, other technology companies considering whether to go public are watching Twilio closely.

Twilio has yet to make a profit, even with more than 28,000 active customers at the end of March including enterprise-software company Box Inc., department-store chain Nordstrom Inc. and rideshare company Uber Technologies Inc.

“This isn’t necessarily the greatest product in the world but the Who’s Who use it’’ said Anthony Evans, director of research at Triton Research, via telephone on Wednesday. “The business model for these guys is so good that they probably will earn money one day.”

Bloomberg technology

Unicorns face tough road to Wall St

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The End of Accounting

Investors are poorly served by arcane accounting methods, a new book argues. New ways are needed to measure companies’ performance.

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