Tuesday, 21 February 2017

"Snap", the sound of voting rights

Article in The Star:

Snap arrives in London to woo sceptical investors ahead of IPO

Some snippets (emphasis mine):

Snap Inc, owner of popular messaging app Snapchat, kicked off its first investor roadshow on Monday, looking to persuade London money managers to back its initial public offering in the face of concerns about its growth prospects, valuation and corporate governance.

The U.S. company, which has yet to make a profit, is targeting a valuation of between $19.5 billion (£15.6 billion) and $22.3 billion from listing on the New York Stock Exchange, after cutting its initial target of $20 billion-$25 billion last week following investor feedback.

Some fund managers have said they will stay away from Snap given its decision to adopt a three class share structure - the first of its kind - that will mean shareholders who buy in through the IPO will not have any voting rights.

Yes, dear readers, mayhem has descended on us: people are asked to fork out billions of USD for a company with a history of losses and will receive no voting rights in return for that.

While all forms of engineering have made strong progress throughout the years resulting in a more safe and efficient world, financial engineering has been the one and only exception.

Time trusted principles (like one share, one vote) are abandoned in place of sheer madness, just for the sake of coming up with more extreme solutions, for which the consultants can charge handsome commissions.

One manager offered some "comforting" words:

"Snapchat offers a cocktail of hype, insane valuations, dubious fundamentals and weak governance. However, the same was said about companies like Google and Facebook when they listed," said Geir Lode, head of global equities at Hermes Investment Management.


  1. I take it you won't be subscribing then? I may be getting too old for it, but after the initial amusement, I think Snapchat gets boring after a while, and struggle to see how the company can monetise even the regular users... also, what happens when the 'next Snapchat' comes along?

  2. No, no subscription by me. I am also not impressed, cant compare them to Google or Facebook, which have a stranglehold on digital ads.