Snapchat Makes Money Disappear

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I'll bet these guys are regretting turning down that $3 billion buyout offer from Facebook a couple years ago. How can you run a business losing this kind of money? :confused:

Advertising. But Snapchat has been advertising since last year—and the internal financials obtained by Gawker show that between January and November of 2014, the company lost a whopping $128 million while bringing in just $3 million in revenue.
 
I simply cannot fathom how the fuck a messaging app company can spend $128M. Like, how?!
 
TwistedAegis said:
I simply cannot fathom how the fuck a messaging app company can spend $128M. Like, how?!
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I can't fathom how a messaging app thought they should turn down $3 billion. Do these guys live in a bubble? The rest of the world knows these fucking startups are overvalued. How do you not take that 3 billion and run? They won't make 3 billion during the apps lifetime.
 
TwistedAegis said:
I simply cannot fathom how the fuck a messaging app company can spend $128M. Like, how?!
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Especially for a messaging app that wipes all contents after a few seconds. It's not like they need their own large datacenter.
 
unless you are sitting on the cure for cancer or aids... the rule should be anytime someone offers you "illions" that begins with a "B" -- you take that shit and RUN.
 
-PK- said:
Especially for a messaging app that wipes all contents after a few seconds. It's not like they need their own large datacenter.
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What else have they done to the app? You send a picture to someone, you can draw on it.

Done. A bug fix here and there as OS updates occur. Jesus, incomprehensible. How does their Board, whose capital this is, sit there and allow this to occur?!
 
percydaman said:
I can't fathom how a messaging app thought they should turn down $3 billion. Do these guys live in a bubble? The rest of the world knows these fucking startups are overvalued. How do you not take that 3 billion and run? They won't make 3 billion during the apps lifetime.
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At one point Facebook was worth 3 billion. What if snapchat gains in such popularity that it becomes the default IM client on every phone. Samsung, LG, Google, Apple, they must now all pay royalties to Snapchat, that was the dream. Then AOL comes out of nowhere and buys them for 50 trillion dollars because AIM has made a comeback on the desktop computer. The thing is once you become a billionaire you dont really need any more money. There is nothing on this planet for sale that you cannot afford. Your perception of cost is divided by 10000. A ferrari is now the equivalent of 20 bucks. Buy 5 of them and have a destruction derby. Sleep in a different mansion every week. They had every reason to believe they could get more, the question is why bother?
 
WTF is snapshot anyways. This is probably why they spend money, obviously not on advertising.
 
percydaman said:
I can't fathom how a messaging app thought they should turn down $3 billion. Do these guys live in a bubble? The rest of the world knows these fucking startups are overvalued. How do you not take that 3 billion and run? They won't make 3 billion during the apps lifetime.
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GroupOn turned down $6 billion from Google. Dumbest mistake ever. Snapchat is no better. It's call hubris which will lead them to nemesis.
 
Yeah. Advertising. Like advertising my new Lambo I just bought with our marketing departments funds.

I sense an impending suit. It's going to get found out that groups of execs have been spreading the... word... in Curacao or something.
 
So they make their money off of advertising (i.e. people using their app and service), yet they refuse to create (or allow to be created by a third party) a Windows Phone app because the CEO hates Microsoft.

Yep. This all sounds about right.
 
I am not a Snapchat user.

I understand the initial use for Sexting because your image would self destruct. Now that every platform can just save the image when you text it to them....

Why do people continue to use Snapchat vs other communication platforms? Yes I am old and out of touch.
 
Travel and Entertainment: $1,995,129.05
Outside Services: $13,781,412.04 (as far as I can tell this is not bandwidth or datacenter costs)

If you want to know why they bleed money, there's a start.
 
Outside Services: $13,781,412.04 (as far as I can tell this is not bandwidth or datacenter costs)

Wow that is a lot of H&B... :eek:
 
Sparkyy said:
Outside Services: $13,781,412.04 (as far as I can tell this is not bandwidth or datacenter costs)

Wow that is a lot of H&B... :eek:
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I can't think of what else it could be, but I would love to see a breakdown of it. What a world we live in when 13.8 million of "other" expenses can be a single line item.
 
-PK- said:
Especially for a messaging app that wipes all contents after a few seconds. It's not like they need their own large datacenter.
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wiping content = small data center = small expense

big expense = large data center = retaining content in some way.

pick one.
 
The wipe the data from the app; I'm not too sure they're not retaining it on their end. Weren't they hacked and that was what was discovered?
 
Gunnerwolf said:
I am not a Snapchat user.

I understand the initial use for Sexting because your image would self destruct. Now that every platform can just save the image when you text it to them....

Why do people continue to use Snapchat vs other communication platforms? Yes I am old and out of touch.
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The feeling of being less likely to have your comments come back to haunt you. The world today is ready to lynch you if you do the wrong thing, say the wrong thing. Puts a lot of pressure on people, especially young people. There's at least the illusion things won't comeback to haunt you. This year making fun of people with German accents is big fun, next year it on the disapproved list. you never know when last years joke will cost you an opportunity the next day.
 
Snapchat's platform bigot of a CEO deserves to go down in flames. I can't wait for the party to be over.
 
Snapchat is terrible and I hate how teenagers are constantly popularizing stupid crap. If you need to send a message that deletes itself in a couple of seconds, chances are that it wasn't worth sending in the first place. Seriously, have you ever seen anything on Snapchat that amounted to anything more than what flavor of Bubblicious someone bought, or what nude pics a female teacher sent to seduce her students.

And there is no doubt that everything is kept on a server somewhere. You don't make apps like these and not keep a copy of the data to mess around with, especially one that toots privacy and was developed by people who think the supermodels they date are actually interested in their personalities.
 
Let's see, internet startups with little to no revenue getting absurd valuations and having tons of investor money thrown at them. Gee, where did we see this before? Can anyone say "bubble"?
 
illumined said:
Let's see, internet startups with little to no revenue getting absurd valuations and having tons of investor money thrown at them. Gee, where did we see this before? Can anyone say "bubble"?
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Data.... Lots of Data.......

They might not have the revenue, but the data is worth everything for other corporation like Facebook and Google.
 
McFry said:
At one point Facebook was worth 3 billion. What if snapchat gains in such popularity that it becomes the default IM client on every phone. Samsung, LG, Google, Apple, they must now all pay royalties to Snapchat, that was the dream. Then AOL comes out of nowhere and buys them for 50 trillion dollars because AIM has made a comeback on the desktop computer. The thing is once you become a billionaire you dont really need any more money. There is nothing on this planet for sale that you cannot afford. Your perception of cost is divided by 10000. A ferrari is now the equivalent of 20 bucks. Buy 5 of them and have a destruction derby. Sleep in a different mansion every week. They had every reason to believe they could get more, the question is why bother?
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It won't. Not if they're whole shtick is that everything is deleted seconds after it's viewed.
 
The problem with snapchat is the same as twitter. Nobody like Google will buy them because most of the juicy data of value is visible and can be scraped. Why buy the cow when you can get the milk for free.
 
Methadras said:
GroupOn turned down $6 billion from Google. Dumbest mistake ever. Snapchat is no better. It's call hubris which will lead them to nemesis.
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Even more crazy, for significant periods of time since 2011, Groupon's market cap has actually been higher than $6 billion!
 
shansoft said:
Data.... Lots of Data.......

They might not have the revenue, but the data is worth everything for other corporation like Facebook and Google.
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Yes and I'm sure Yahoo! was just acquiring customers when they spent $3.7 billion on acquiring Geocities. I'm sure they were acquiring content when they bought Broadcast.com for $5.7 billion. Both of these purchases were made in 1999 during the last tech bubble, didn't exactly go well for them now did it? We can try and rationalize it, there's always reasons why bubbles can't happen here and why this time is different, but in reality there is no way snapchat is worth anywhere near as much as it's valued as. We have seen this before.
 
psimitry said:
So they make their money off of advertising (i.e. people using their app and service), yet they refuse to create (or allow to be created by a third party) a Windows Phone app because the CEO hates Microsoft.

Yep. This all sounds about right.
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Ordeith said:
Snapchat's platform bigot of a CEO deserves to go down in flames. I can't wait for the party to be over.
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I assume these are talking about the same thing? Can you guys explain?
 
Kaitian said:
I assume these are talking about the same thing? Can you guys explain?
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Snapchat has no love of Windows Phone. There was an excellent independent Snapchat client call 6chat that Snapchat forced from the Windows Store and I think the developer was willing to sell or give them the code and Snapchat gave him the middle finger.
 
I don't know why news like this about a company like Snapchat surprises anyone. We are clearly in another bubble though this time its an "app" bubble. When it bursts it will be just as painful as the dotcom bust. I don't care how popular your app is with any demographic. If you have no means of monetizing it then it is worth $0. And who is advising Spiegel and the other cofounders? Who turns down $3B!!!! Oh wait, arrogant, entitled app developers who think they are the next Facebook. Well deserved outcome is all I can say.
 
The sad thing is they turned down the $3 billion offer.....but it's worth $16 billion now. Can someone say "Nasdaq bubble"?
 
PersonalJ said:
They're not a public company and are not listed on the Nasdaq.
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I think the Nasdaq reference is more about the prior dotcom bubble that took down the Nasdaq since most of the tech companies at that time were listed exclusively on that index.
 
I see this all the time. Companies think they can do better than the 3 Billion dollar offer or something. The people on this board need to be slapped.
 
welp, anything looking to profit based on teens is going to be subject to "fad of the month". Once it is over, where is the sustainability? shit just keeps repeating. people get confused thinking that a "fad" is the same thing as "success"
 
SLee said:
Even more crazy, for significant periods of time since 2011, Groupon's market cap has actually been higher than $6 billion!
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That means nothing in the face of getting $6 billion in hand. Unless that market cap is exercised it's about as good as the ticker tape that says it's worth.
 
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