SNAP and Spiegel, fleecing the public

The Snapchat mobile product is bad for its users, addicting them to shallow gamified communication, while showing untargetted and shallow mass media advertising.

Snapchat the stock also leaves the public markets and employees hanging, while enriching only early founders, VC and investment bankers (massive offering fees).

SNAP closed on IPO day at a $28B valuation, and is now down to $21B, for a $7B loss. Public owners (20%) have now lost $1.4B, many of the employees are vesting underwater shares, but the early founders and VC are still in the black.

Spiegel (and Murphy too probably) have already sold >$275m and also hold preferred shares, which will retain value even if all common share holders lose everything.

With very unlikely impressive sustained growth, after several years, others than those in the top 0.01% could share some benefit. Until them, America got fleeced.

At least the FB community has a promise that >25% of their joint created value is going to charity, including 99% of Zuckerberg’s ~25% holding, partly for “curing all diseases in our children’s lifetimes”, and company profits go to “connecting the world” and bringing people together and giving everyone a voice.

Snap lost over $2B in their first public quarter, and the media reports that most of this was “stock compensation” to employees. $800m of it was just to Spiegel, and I guess he didn’t really care what that first reported massive loss would do to the public shares.

As many new companies act like this, and many old companies get massively disrupted by upstart innovators, diversified passive index investing becomes dangerous and unprofitable.

Spiegel’s bonus:

Snap ownership: