Snapchat CEO Warns "Easy Money Policy" Has Created The Tech Bubble, "Matter Of Time Til It Bursts"

Tyler Durden's picture

A month ago 24-year-old Snapchat CEO Evan Spiegel gave global sheeple investors a glimpse at the reality in Silicon Valley's and how the second tech bubble will burst (via his comments from 2013). Overnight he stepped up the rhetoric, as ReCode reports - itself in the midst of a stock-only buyout by Vox - Spiegel warns we are currently living through a tech bubble and that it’s a matter of when, not if, the tech bubble will burst. "People are making riskier investments and... there will be a correction," he warned, placing tha blame squarely on The Fed's shoulders, explaining that the bubble is being fueled by an "easy money policy" and low interest rates - that may not last much longer.

 

What Spiegel said in December 2013:

Fed has created abnormal market conditions by printing money and keeping interest rates low. Investors are looking for growth anywhere they can find it and tech companies are good targets - at these values, however, all tech stocks are expensive - even looking at 5+ years of revenue growth down the road. This means that most value-driven investors have left the market and the remaining 5-10%+ increase in market value will be driven by momentum investors.

 

At some point there won't be any momentum investors left buying at higher prices, and the market begins to tumble. May be 10-20% correction or something more significant, especially in tech stocks.

More importantly, Spiegel brings up an absolutely critical point for the second tech bubble fueled by social-media stocks: there simply is not enough ad spending dollars in existence to support the gargantuan market caps.

Total internet advertising spend cannot justify outsized valuations of social media products that derive revenue from advertising. Feed-based advertising units will plummet in value (in the case of Twitter, advertising spend may not move beyond experimental dollars) similar to earlier devaluing of Internet display advertising.

And now,

Evan Spiegel isn’t afraid to say that we are currently living through a tech bubble, even if he and his Los Angeles-based company are taking advantage of it. The CEO of the popular messaging service said on Tuesday that it’s a matter of when, not if, the tech bubble will burst.

 

“I think that people are making riskier investments and … there will be a correction,” he said on the first night of the Code Conference in an interview with Kara Swisher and Walt Mossberg.

 

“[I]t’s definitely something we factor into our plans,” he added.

The full interview is enlightening - it appears 'they' know it's just a matter of time...

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Millivanilli's picture

In other news Japanese Yen hit 124 to the dollar.   

At what point will the Japanese get inflation?   

Haus-Targaryen's picture

I think 200/1 USD would do it. 

Captain Debtcrash's picture
Captain Debtcrash (not verified) Haus-Targaryen May 27, 2015 9:07 AM

I already like this guy.  I wonder what will happen if they pull off banning cash and implement negative rates. I’m guessing we go from bubble to supper bubble in stocks but even more so in real-estate.  Won’t prevent the eventual crash though. 

chumbawamba's picture

Yes, because everyone needs a 24 year old douchebag to tell them that we're in a tech bubble, and it's going to burst.  Next week, Evan is going to reveal the shocking fact that the sun rises in the east and sets in the west.

I am Chumbawamba.

Murf_DaSurf's picture

 

 

 

This is the kid that turned down $1+Billion dollars in CASH from Facebook for SnatchChat.....Why is he so smart, again?

Oh regional Indian's picture

I guess it does not hurt that YET another large valuation shit-for-product company is run by a tribal-ist.

Speigelberg, drench us with some more OBVIOUS wisdom, please?

 

boogerbently's picture

The only ones who created the "tech bubble" are the morons that kept buying and ran the P/E up to 200.

Buffet would never invest in ANYTHING with a P/E over 10. (normal market)

weburke's picture

a billion in stock would have been my reccomendation. 

Max Cynical's picture

it was a $3B offer from FB.

Snapchat CEO Reveals Why He Rejected Facebook's $3 Billion Offer

http://mashable.com/2014/01/06/snapchat-facebook-acquisition-2/

813kml's picture

Yes, this is the greedy dumbfuck that turned down a $3 billion cash offer from Facebook because he thinks he can make much more in an IPO.  Funny that the genius doesn't realize his net worth is based entirely on the tech bubble created by easy money policy.  It will be schadenfreude when he gets completely wiped out.

Max Cynical's picture

Snapchat CEO Warns "Easy Money Policy" Has Created The Tech Bubble, "Matter Of Time Til It Bursts"

Yes, so this won't be a surprise...

Snapchat's Evan Spiegel: 'We need to IPO'

http://www.latimes.com/business/technology/la-fi-tn-snapchat-ipo-2015052...

'We need to IPO' = We want some of that easy money

Fukushima Sam's picture

Well, people in his age group are busy living less-aware twenty-something lives and are more likely to listen to him than the old people.  And the fact that he sees this at 24 when most people are focused on getting laid is somewhat remarkable.

Atomizer's picture

The carry trade is drying up. If memory serves me right, many dot com employees went postal. Most of the carrot on a stick wealth was promised thru IPO stock share guarantees. In the mist of boom, the employee was worked as a Hebrew slave mule. 

GMadScientist's picture

The infertile 63 chromosome blind alley is a fitting metaphor for the Japanese economy as a whole, but that's what a keiretsu gets you.

Oh regional Indian's picture

Both excellent and on point above.

GMadScientist's picture

The "More Than You Can Carry" Trade?

yogibear's picture

Japan is the Federal Reserve's PhD grand experiment, coined Abenomics.

new game's picture

124 yen for a dolla, shouldn't toyotas be dropping in price? record american profits? fucking new toyotas clog the streets. wtf.

Larry Dallas's picture

Toyota is the vehicle / brand of choice for all Muslim extremists since the 1970s.

Abbie Normal's picture

It'll drop in price when the Toyota workers in California, Kentucky, Canada, etc. get paid in yen.

Bro of the Sorrowful Figure's picture

saying that there will be a correction is putting it very lightly indeed. 10-20% is optimistic

VinceFostersGhost's picture

 

 

I remember the last time this happened.

 

Thank goodness the crappy CNBC commercials died with it.

 

Fly me to the moon? Yeah, I don't think so.

Haus-Targaryen's picture

2000 was a tech bubble
2007 was a housing bubble
2015 will be a tech + housing + equities + debt bubble with a currency war for dessert.  

Bro of the Sorrowful Figure's picture

massive credit expansion leading up to 1929, 1987, 2000, 2007, 2015.then credit contracts and the bubble defaltes.

anything that the credit reaches becomes a bubble. you correctly identified 2000 and 2007. but in 2015 i would specify that "debt" really means the bond markets including those of all the world's governments, which means that everything the government spends money on in now in a bubble, most notably: education, health care, auto industry, govt pensions, govt employee benefits and salaries and total # employed. it also includes corporate bonds which companies used to finance stock buybacks and further juice stock and other asset prices. everything is on super doses of credit steroids since everything perpetuates everything else. good lord i just convinced myself to go buy some more PMs

new game's picture

bond levitation with moar debt. gravity, where art thou?

VinceFostersGhost's picture

 

 

Look up to see that 747 flying right over your head.

Arnold's picture

Those IT playground snots better be looking for work in the Manufacturing sector.

 

Oh.............

Energy sector

oh..............

Logistics and transportation.

oh........

 

Service industry.

Bingo.

lehmen_sisters's picture

I think you're right. I started welding, now i'm one of those IT snots. I used to think welding or manufacturing would be a good backup plan, now i think i might need to learn how to operate a cash register and scan Doritos.

Arnold's picture

All my crap aside, good luck to you.

 

 

NoWayJose's picture

Only the first class toilets on a 747 discharge directly beneath the plane to fall to earth - the 1% prefer it that way.

Dr. Engali's picture

How dare he speak the truth! He probably shouldn't be doing any home improvements involving a nail gun. 

firstdivision's picture

Did he snapchat the statment and accompany it with a picture of his cawk?

GMadScientist's picture

I maintain SnapChat == Chat Roulette for the "too dumb to set up a webcam" crowd.

GMadScientist's picture

The world's tallest midget (paper billionaire) is warning us about his bladder?

S'okay, we have back up systems. EVERYBODY BACK UP!!!

JBilyj's picture

Momentum buyers will become momentum sellers

NoWayJose's picture

But a correction would cause the Fed to adopt 'an easy money policy' and 'low interest rates'? Right?

GMadScientist's picture

Lowerest! They're good with anything below the line on the chart marked "US government defaults".

Stoploss's picture

"bubble is being fueled by an "easy money policy" and low interest rates - that may not last much longer."

Alan Greenspan...

Ben Bernanke...

Janet Yellen...

Someone, anyone, ask the 24 year old CEO to please define the term 'not much longer' as it seems to be taking forever, for this to occur.

GMadScientist's picture

Until he can sell his pile of paper nothings for different paper nothings? Or maybe he's trying to jawbone the market unaware that this is a melt-up and there's only one direction on the PPTs todo list?

Seasmoke's picture

Snap. Crackle. Pop. 

Atomizer's picture

Evan, why the Hanes T-shirt and girlie socks? If you have owned a BlackBerry phone, pressing the volume +/- key will take a screen shot. No iFag APP needed. FYI. 

Atomizer's picture

Evan, I can take photos on my BlackBerry. Then click on story maker. It creates a video with the option for background music. You might want to buy a blackberry passport to explore current technology. Good luck with IPO. I agree with your views on the QE free money expansion coming to a end. 

Counterpunch's picture
Counterpunch (not verified) Atomizer May 27, 2015 9:34 AM

I just copied and pasted this to send to a few buddies, I lol'ed - haven't seen "blackberry" associated with "current technology" in quite some time.


Thank you for the chuckle.

Atomizer's picture

Your welcome. I love the passport. The wife has my old Z10 and a ZTE. Glad to bought the launch model, don't care for the AT&T rounded corners release.

The only issue is that I cannot make WiFi calls. T-mobile and BlackBerry need to mend the fence. Mrs Atomizer's are T-mobile equipped for WiFi. We are on Hilton Head Island, 4g LTE reception is touch and go. So I borrow her phone when needed. 

Counterpunch's picture
Counterpunch (not verified) May 27, 2015 9:33 AM

guy became a billionaire because 16 year olds taking mirror pics of their tits didn't know their boyfriend's phone could do a screen capture.

 

What can be learned from the economic rape of Russia in re the next clusterfuck?

Harvard Mafia, Andrei Shleifer and the economic rape of ...

 

Class?

inhibi's picture

Went to highschool with this prick.

 

He's part of the LA elite. His grandaddy donated an entire wing to the Stanford Law School.

He stole the idea to Snapchat from his friend and pushed him out of the 'company'.

And now he's lauded as a genius. GTFO. 

GMadScientist's picture

Exactly. The kind of priveleged little shit that the LAPD would kindly not arrest even after he mowed down a pedestrian in broad daylight.

Monty Burns's picture

Presumaby in that case he's one of the Tribe?

joseJimenez's picture

“I think that people are making riskier investments and … there will be a correction,”

 

Must be the new name for computers, algos and the banksters