Wall Street Analysts Throw Up On Snapchat IPO Euphoria As Comcast Invests $500 Million

Tyler Durden's picture

When it comes to sellside opinions about yesterday's SNAP IPO, there are two camps: those from analysts who belonged to the underwriting syndicate, which for obvious reasons (Goldman and Morgan Stanley were both paid over $20 million for their underwriting efforts) have been broadly positive about the public offering... and those from everyone else. And as a quick skim of opinions from those analysts who were not part of the Snap underwriting group, reveals, virtually all were quick to  throw up the euphoria behind the IPO in notes released overnight, calling the stock price "unsustainable" as a long-term investment. Meanwhile, firms that helped take the company  public this week have yet to initiate research coverage. Among the biggest IPOs in recent years, Snap’s first-day pop was the largest other than Twitter.

Below, courtesy of Bloomberg, is a summary of select sellside report SNAP excerpts:

Susquehanna (Shyam Patil)

  • Euphoria could cause short-term disconnect between fundamentals and valuation; “longer-term we struggle to see SNAP as an investment with meaningful upside potential from current levels”
  • Current price of $24 could leave room for near-term upside potential given heightened level of interest; stock could reach high $20s to low $30s
  • Neutral, PT $22

Atlantic Equities (James Cordwell)

  • Trading at a premium to Facebook after normalizing for engagement levels; valuation unsustainable given unproven monetization potential, lower profitability, likely challenges in materially reaccelerating user growth
  • $24/share values stock at 15% premium to Facebook on EV-to- time spent basis; effectively implies Snap will be able to better monetize its engagement than FB
  • Downgrades to underweight from neutral, PT $14

Aegis (Victor Anthony)

  • Snap trades at 31.7x Aegis’ 2017 sales est. vs 9.8x for Facebook and 4.0x for Twitter
  • Bull-case model sees fair value of $34, bear case points to $12
  • Hold, PT $22

Nomura Instinet (Anthony Diclemente)

  • Already-slowing growth in daily active users, monetization limit Snap’s upside
  • Also cites fierce competition from larger rivals, rich valuation; rev. opportunity constrained relative to expectations, shares fairly valued, at best, at the $17 IPO price
  • Reduce, PT $16

Pivotal (Brian Wieser)

  • Likely scale of long-term opportunity, execution risks, dilution from share-based compensation represent negatives
  • Promising early-stage company with significant opportunity ahead is “significantly overvalued”; risks include aggressive competition, core user base not growing by much, “sub-optimal” corporate structure, high expenses, cash costs
  • Sell, PT $10

Finally, for what it's worth, CNBC parent Comcast announced the NBC Universal had invested $500 million into SNAP as part of its IPO.

SNAP is higher in the pre-open (seemingly jumping after the NBCU headlines)

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JTimchenko's picture

In the novel, "The Synod", the main character is a lawyer and one of his assignments (by his big bank employer), prior to his awakening to the corruption around him, is to get a favorable settlement of charges against bank employees involving an IPO.

As described there, virtually all IPOs involve crookedness in the sense that bankster underwriters and cooperating hedge funds help pump up IPO stock prices and try to catalyze euphoria. The banks and hedgies work together to get non-connected entities, like independent investors and mutual funds, to buy in at excessive prices. The underwriters engage in various techniques to artificially provide so-called "pricing support".

At the appointed time, the banksters and cooperative connected hedge fund managers sell to the excited public, at inflated prices, the "pricing support" ends, and the stock price tanks. The banksters and connected hedge fund managers go home with their pockets full of cash, and the general public is left holding the bag.

I wouldn't buy an IPO unless I was an insider! But, then, of course, I'd also be unethical, as well as a felon. For that reason, I wouldn't buy an IPO at all, because the outsiders always get screwed. Better to wait until a month or so after the initial offering. Then, pick up the stock, if you still want it, after its price has already tanked.

Looney's picture


Did the food-stamps program, SNAP, just go public?  ;-)


barndoor's picture

When it comes to the valuation of financial assets in this market, there are only varying degrees of absurdity.

bamawatson's picture

speaking of gov food program;
check out Minimun weight requirement here


Nobody For President's picture

Americas Got Fat? I had a woozy moment reading this that I had just fell into the movie Idiocracy...


floosy's picture

Snapchat posts a half billion dollar loss and says it may NEVER be profitable.  But its "worth" $33Bn right?  Right?



Ramesees's picture

That's standard language in offering docs.  Do any commenters on ZH actually do financial work for a living or are they all just angry conspiracy theorists?  

hooligan2009's picture

you mean that banksters/financial marketers AREN'T involved in a conspiracy to defraud everybody using any ad all means available (including charging investment management fees for shit, risk adjusted, perfroamnce after fees -  and - charging 12 bucks a month on current account balances at banks of less than 1,500 like JPM)?

Evil Peanut's picture

let's not forget that these APP/Web services are basically proping up the stock market on nothing more than hot air valuations

E.F. Mutton's picture

I have a new app that turns faces into Taco-Faces!  Or Burger-Faces!  Funny!

Where's my $5b?

Ghordius's picture

and there you have it. what is one of the biggest complaints against fiat currency? that "value" is created out of nothing, by gov (actually, it's banks and their customers, too)

so what is this IPO, exactly? a bunch of people, banks and brokers agreeing that a Snap stock has value, and putting a price on that

great, eh? "value" by agreement

oh, but it's fine, isn't it? because the Church Of The Free Market said it is, or something. it's vicars are always out in force to mention that the Free Market can't do wrong, can't be criticized, etc. etc.

but there you have it, in front of your noses: it's not the FED or the banks that are pumping money into it

this "valuation" is being done... by the market. it's Fiat By Market Value. it's newly created wealth. it's bubble wealth, but that's the next chapter

which goes roughly like "you can't let the stock market crash!!! the banking system will crash, too!!!", lastly seen when Hank "Tanks in the street" Paulson presented the bill in form of TARP and TALP

yes, my dear snowflake, the origin of every crash starts... with you. your own valuation of your own house, portfolio, whatever

oh, damn. nobody really wants to look in the mirror. or reflect how life was when the Tulip Bulb Mania meant that one flower bulb was valued and exchanged by the market as the equivalent of a well built house

markets are a bit like democracy. the worst systems.... except for everything else

they both ought to have a warning sign on them: "Danger. It contains... humans"

Stinkytofu's picture

"value" is created out of nothing"

oh. so snapchat = bitcoin ?

justdues's picture

I am not FORCED to buy Snatchchat or to pay taxes with it . So very big difference there my deluded little defender of all things EuroStatist . Violence ...no violence ....violence ...no violence ...geddit ?


BlueHorseShoeLovesDT's picture

NBC Universal invested in it.


ha ha ha ha

ejmoosa's picture

These news channels are already dependent on Twitter and Youtube for their cute photos, storm pics  and other nonsense as part of their show content.

Guess they are hoping they can tap into Snapchat as a source as well.


Max Cynical's picture

Silicon Valley high school makes $24million in the Snapchat IPO five years after parent convinced them to invest $15,000 in seed money


SallySnyd's picture

It's 2000 all over again and the lessons taught by history have been forgotten.

Big Corked Boots's picture

On the contrary, the lesson has been well learned. The trick is to repeat them and leave someone else as the bagholder.

MrBoompi's picture

I have some awfully nice tulip bulbs for sale.  

bamawatson's picture

contact silicon valley high school

Rainman's picture

Best of all, last year's SNAP non-earnings : minus half a billion fiatscos !!

ejmoosa's picture

Symbolic of the entire market yet here we have an example that is on display for all to see.  A more traditional yet obsolete fundamental analysis says the DOW is grossly overvalued.  Here is a list of that gross overvaluation by stock:  


If analysts see the Major shortcomings in Snapchat, then why are they blind to the Dow 30 and their lack of earnings, their increased debt levels and their ridiculous valuations?

This Emperor has no clothes, and we all know it.


We could have a little fun.  What if we all downloaded the Snapchat app today...

And then deleted it Monday morning after the press shows up all giddy about all the new users?

NugginFuts's picture

I like this plan. Count me in. Dick pics for everyone! Then delete. 

Arnold's picture

Saudi Aramco IPO , next big thing.

south40_dreams's picture

This company's intellectual property portfolio is empty. Really.

LetThemEatRand's picture

Goldman Sachs made money on the deal.  As far as everyone else goes, muppets will be muppets.

GRDguy's picture

Morgan Stanley verifies (for $20 million) that Goldman-Sachs (who got $20 million) is not lyin'.

Are "investors" really that stupid?  Guess so. Do you know where pension funds are?

behind the curtain's picture

Isn't Snapchat basically a teenage porn site?

quadraspleen's picture

Snapchat is garbage. The only people who use it are teenagers. They're not gonna make investors any money at all. In fact as soon as they find something else, Snapchat will go the way of MySpace and Bebo (i.e. Murdoch will pay way over the odds for it)

Pasadena Phil's picture

I think these sites have peaked as a whole. Snap is just peeling off the hottest segment as Twitter's collapse accelerates. If reliable numbers were available, I believe they would show that "chatting" is not growing anymore. However, teens may be the most attractive audience to the advertisers. But does anyone trust the "eyeballs" being reported? I believe fudged "eyeballs" numbers will eventually kneecap Facebook as well.

NugginFuts's picture

My teenage niece is addicted to snapchat. I asked her if she's ever paid a single penny for anything on there, features or otherwise. Nope! Fees, advertisements, links to other sites? Nope!

Sure, that's gotta be worth billions. 

analyst123's picture

hence its a smart move for them to IPO b4 the ship sinks... I think myspace had a chance to lure a lot money b4, but missed the opportunity

DrDinkus's picture

Agree these valuations are absurd, but naive to think its not widely used. All of my peers use it, as do celebrities etc. Source: 28 M NYC

PoasterToaster's picture
PoasterToaster (not verified) quadraspleen Mar 3, 2017 10:18 AM

MySpace was the target of a smear campaign that was put out there to destroy it in preparation for In-Q-Tel's Facebook, one of the shittiest, ugliest, "social media" sites ever put together and which nevertheless managed to be the only kid on the block after that.

Wonder if SnapChat is another one of these internet control initiatives.  We'll know if we see its competition targeted in the "media" and subsequently collapsed.

tstpilot00101's picture

Amazing so many people with college degress could be so f***ing stupid.  This company is worth $0.

SNAP!  Your shares today are worth: $0.03/sh   Oh, SNAP!


Atomizer's picture

They are trying to replicate the dot com boom. As if we were idiots. Blowback is a hard pill for them to swallow. Virtual reality machine, Robots, Windows 10, AI, controlled appliances, manufacturing dolls to fuck, the list goes on. I forgot, RFID in all clothing. 

Plan B is for Democrats to continue discrediting President Trump and present weak facts to go to war with Russia. 

All on the illusion of a means to bump the national debt to keep the pigs fed. 

Mementoil's picture

The stock market is about to SNAP!

Atomizer's picture

Oh boy, another dot con for Hedge funds and VC's to magically pull the rabbit out of hat. In case you don't know. My moral responsibility is to protect you. 

The SEC hands are tied. So are the ratings agencies. All under prior President watch. This has nothing to do with Mortgage. Another crash in technology. 

Dot Con (Frontline 2002) - YouTube


Mortgage will hit when debt ceiling is hit under Obama's March 2017 deadline. I don't wish to repeat myself from yesterday's facts. 

small axe's picture

these swindlers should stick to analysis of the roulette wheel, red vs. black, etc. 

Atomizer's picture

They keep banking on hitting the green zero. I don't gamble, I hit a big jackpot in Elgin, IL. Never went back to a casnio again, never will. I beat the house. I remember the green zero. It was the beginning of dot com. Used winnings to create Porn sites. When you peaked, sell it. Which I did. ;) 

Smedley's picture

...and all it really is, is a computer program uploaded to the server!


Pulling investment and resources AWAY from pursuits that might actually add VALUE!!!

Dragon HAwk's picture

Damn I missed another good opportunity to Loose Money.    Snap

rejected's picture

No,,, they'll take all the loose money they can get!

voxale's picture

"This time it's different.".... uh huh.

Grumpy_nl's picture
Snapchat IPO, the most crazy IPO ever. Time to loose some money.
hrhong's picture

if people pay 173 P/E for AMZN then SNAP is still cheap. buy buy