Tag Archives: Stock

Snapchat's Stock Plunge Should End Insane Tech Funding, but It Won't
November 8, 2017 6:06 am|Comments (0)

Four years ago, almost to the day, it was obvious that Snapchat should have taken the money: $ 3 billion Facebook offered to acquire it. But, no, the company’s founders insisted that it would be a bad move. Co-founder and CEO Evan Spiegel and, presumably, others were sure it was worth more. Not according to the earnings release today by parent Snap Inc.

Snap’s 2017 third quarter results were egregious. It was like watching the Coyote in a Road Runner Cartoon stop off the edge of a cliff and keep moving for a bit until, looking down, it realized the situation.

Revenue was up by 62%, which is wonderful. Only, analysts expected nearly $ 237 million in revenue instead of the $ 207.9 million the company had. There was little change in the number of users, and when you depend on advertising revenue to grow the business, that’s really bad. The quarter’s net loss of $ 443,159,000 was more than 3.5 times larger than the same period last year.

The company uses the non-standard measure of “adjusted EBITDA” to measure its, uh, success. Net income or loss excluding interest income and expense, other income or expense, depreciation, amortization, stock-based compensation and the related payroll tax expense, and “certain other non-cash or non-recurring items impacting” the bottom line. Even with that twisting, there was a $ 178,901,000 loss, which tells you just how many contortions it takes to massage the real loss.

Wall Street is not happy and Snap’s stock price dropped by 20 percent inside an hour. Spiegel and his co-founder, Bobby Murphy, are probably not happy either: Between them, their stock holdings lost $ 1 billion in value before the Coyote could finish the long drop with that soft pooft at the end.

If only Snap were an aberration on the West Coast tech scene. But it’s not. There’s billions of investment money in Uber, which is in the red a couple of billion dollars a year at this point. Juciero and its crazy-expensive juicers and juice packs finally packed it in a couple of months ago when it was clear few people were crazy enough to spend many hundreds on a machine and then $ 140 to $ 200 a month on juice. Heck, you could invest the cash and start your own small juice bar at that rate. And Juciero had only $ 118.5 million in venture money.

There’s an old saying: owe the bank $ 100 dollars and it owns you; owe it $ 100 million and you own the bank. This is what Silicon Valley and U.S.-style tech investing has come to. Forget a Microsoft of Apple or even a Facebook, where the companies went public after they were making real money. They build businesses that understand the profit concept, not almost eternal indebtedness that was supposed to turn the corner one day.

Here’s the difference: Snap’s founders lost a lot in paper worth on a company that, if you took away all the venture money, would be out of business. Microsoft launched Bill Gates who, back in 1986 when he was 30, was “probably one of the 100 richest Americans,” according to Fortune. Now he’s the richest man in the world.

Investors have been entranced by companies that seem like they should be worth billions and billions because they have scalable architecture and, doggonit, people like them. But it’s not enough to have a likeable business. Attention isn’t enough. Do VCs and money people not know the history of the dot com bubble? “Eyeballs,” a former crazy measure of success, don’t count for squat unless you have a solid business model that can create revenue and, eventually, profit.

Entrepreneurs would be better off to forget the nonsense that has passed for business acumen all too often and instead focus on the three basic questions: What needs to people have, what can you do to solve them, and how will you get paid? If you can’t answer all three, better keep working on the idea.

But, too many investors will keep hoping for the magical company that will make their fortunes, and too many entrepreneurs will want to be the mighty captain of industry. Things won’t change until a couple of these unicorns go spiraling into the desert floor so hard and fast that it makes a Coyote landing look like a short drop to a fluffy mattress.

Tech

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Why Alibaba Group Holding Ltd (NYSE:BABA) stock will rise 60% the next two years
July 27, 2017 2:55 pm|Comments (0)

As seen, Alibaba Group Holding Ltd (NYSE:BABA) has quickly grown its cloud computing paying customer base. When compared to the likes of …


Cloud Computing

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My 3 Biggest Stock Holdings
January 7, 2017 9:05 pm|Comments (0)

The market had become extremely pessimistic about IBM’s ability to adapt to a world where cloud computing was growing in importance. Revenue …


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Intel Corporation (INTC): This Could Send Intel Stock Soaring
November 19, 2016 5:50 am|Comments (0)

Cloud computing is one of the hottest fields in tech today. It allows businesses to operate massive amounts of software without having to set up their …
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Reduced IT Spending Could Hurt IBM Stock
November 16, 2016 11:40 am|Comments (0)

The silver lining is that cognitive solutions (i.e., cloud computing service) have been picking up steam, albeit at a slower pace than expected.


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Qlik Stock Withdrawn As Thoma Bravo Completes Acquisition
August 31, 2016 7:50 pm|Comments (0)

The acquisition of Qlik Technologies by a private equity firm Thoma Bravo closed last week . Announced last June, he deal was completed for around $ 3 billion, in which Qlik shareholders got the price of $ 30.50 per share. Trading in Qlik was suspended after the completion of this acquisition.


Cloud Computing

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GOOG Stock: Is Alphabet Inc a $1000 Stock?
July 7, 2016 4:15 pm|Comments (0)

According to senior Google executive Diane Greene, the company is “dead serious” about breaking into the cloud-computing business.


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Delta’s Amazing In2ition Showerhead Is Back In Stock For Just $18
July 1, 2016 2:40 pm|Comments (0)

The showerhead that came preinstalled in your home or apartment is probably terrible, but if you don’t have the cash to upgrade it to a Delta In2ition , the Delta 75152 is a fantastic option at under $ 20.

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Oracle whistleblower suit may put dark cloud over stock
June 2, 2016 10:25 pm|Comments (0)

Wall Street is already jittery about the impact that cloud computing services, and their low profit margins, is having on corporate software companies …


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Salesforce Stock Pops After Stealing Market Share from Oracle and SAP
May 19, 2016 1:05 am|Comments (0)

Shares of the company, which is seen as a barometer for the cloud-computing sector, rose 5.9% in after-hours trading. Salesforce has been gaining …


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