Matt: [00:00:00] Hello I’m Matt Davio. Welcome to the “One Minute Trader” podcast. We’re helping time crunched traders succeed in trading the markets while on the go.
Matt: [00:00:38] Hey you know it’s funny as a trader I get asked all the time, what are you buying, You know what are you investing in. I really don’t consider myself too much of an investor. But today I thought we’d talk about a popular new stock that’s in the marketplace called Snap Chat $SNAP. And the reason I want to talk about it is there’s some things going on right now with the technical nature of the way that the stock is behaving and where it is and price and time that I thought we’d talk a little bit about the fundamentals not that I know too much about them but more along the product and. And do we think it’s got a longevity to it. So Tony welcome back. One minute trader and snapchat. Do you use it?
Tony: [00:01:22] I have used snapchat quite a bit, my marketing background. I’ve seen quite a bit of use of snapchat lately so.
Matt: [00:01:29] What do you think? I mean you know from you know you are in the marketing business you know are you seeing success on a corporate level. I mean are companies having success using snapchat to actually- You know are there any metrics that suggest that it actually pays off?
Tony: [00:01:49] So I’m seeing Snapchat is actually really a tool or enough audience building you would like a thought leader or an authority. The marketplace actually come on snapchat and kind of jumped over a little bit to Instagram as well. But as far as like a product like Pepsi to be putting ads out of the content delivery is quite a match.
Matt: [00:02:11] Well now it’s changing you know as all products. You know they’ve always said even in their in their S-1 before they came public and an S-1 by the way is the technical term that is sold. It’s the piece of paper that shopped around before they take the company public and it tells you everything about the company. So who is involved who was the starters, who started the company. What you know what their backgrounds were who gave them money etc.. And one of the things in the S-1 they said was we are a camera company. I mean do you really think they are? You know because they have the spectacles right. And I’ve never used them have you ever used those.
Tony: [00:02:50] I’ve never used them but I’ve seen how they work on the camera is a little bit of kind of-
Matt: [00:02:57] And are those are the glasses? Is that what it is?
Tony: [00:02:59] Yes these glasses were you have cameras on either side of you.
Matt: [00:03:03] So they’re going two dual cameras.
Tony: [00:03:05] Yes there’s one. As far as I know. But from what I can tell that they maybe a camera and a mic but I am not 100 percent.
Matt: [00:03:13] So why isn’t it out there. I mean if that sounds potentially cool. But do you think people would really wear those.
Tony: [00:03:20] So again some of the influencers on I’m following right Gary Vee has them, obviously. you have some guy over in Israel and he has a lot of tech coverage so he’s the tech guy but he uses them all the time.
Matt: [00:03:35] And Gary Vee is using them? I don’t think so.
Tony: [00:03:40] And then anybody who does like a daily snapchat as just the medium they’re using them.
Matt: [00:03:46] Like can we buy them?
Tony: [00:03:49] I don’t know. Right now the way that is snapshot of the whole marketing shtick because they had the vending machine. Well the big cities you can go and buy them for 125 dollars for two pair.
Matt: [00:04:00] You have to buy two pair?
Tony: [00:04:02] No the limit was 2 pair.
Matt: [00:04:03] You can only buy two pair.
Tony: [00:04:03] Because things that are on line. And was a pretty good marketing model as far as I was concerned. That’s cool. I don’t know what that is.
Matt: [00:04:11] You know even even thought leaders like Gary Vee have said listen you know snap he’s still snapping.
Tony: [00:04:16] Right.
Matt: [00:04:17] He was early early on with that. I mean he’s he’s definitely on Instagram. I don’t know he got the part of me goes it has to be easy for the masses right. And there was a reason why the younger generation uses snapchat because they could you know they could eliminate messages so it was basically just messages. And so you’d have you know people using it for sending you know sexy pictures and all that stuff like that was really the first thing. And now it’s it’s interesting that it’s leaked over but I happen to know. I’ve also used it for a year and kind of the difficult thing I think I found was it’s hard to search. It was harder to search and it still is hard to search even though they’ve opened that up. Whereas Instagram is literally simple yet.
Tony: [00:05:06] Well Instagram has Facebook behind them and took all their technology.
Matt: [00:05:09] It’s a rip off right. It’s it’s it’s a total copy because it works right. And but it’s also easy to use. Whereas Snap has never been intuitive.
Tony: [00:05:19] That’s true.
Matt: [00:05:19] And I think it worked out but it was like when you really think about it I think it was almost a lucky. More like the right place right time because I don’t you know I just don’t think their engineers were that good.
Tony: [00:05:32] Yeah.
Matt: [00:05:33] Initially.
Tony: [00:05:34] Well that had some cool technology like the augmented and the face changes.
Matt: [00:05:39] That was fun. It’s fun.
Tony: [00:05:41] So we got some ground to make up I think.
Matt: [00:05:44] Now when we when we look at the stock though and it’s now been trading publicly since early March so we’re coming up on basically we’re into the sixth month and a couple of things. They price the stock at $17. The day that it went came public it traded I think as high as it was at $34. So that first day. The high is the needle spike on the chart there. It was the first all the way up. We know that. $29.44. So the the all time high to date, on snapchat was $29.44 That was the day it came public. And so. In the S-1 when they decide you know the way that IPO is work is the banks that bring them public. Basically shopping around to see what the demand is. They sell their shares that they’re putting public. Then there’s lockup periods that insiders can begin to sell into and that usually starts at three months. So that period has begun. And when that happened that was April. So in April May mid June the stock basically sold off from $20 where it was at that point all the way down to. Now the IPO price. So for the last month we’ve been now trading at that $17 area for five or six weeks. And there’s been some massive Support. Obviously by the banks are trying to keep it above $17 and the reason they are is because, well, first of all if you bought IPO shares in the public market you got them at $17. So if it goes below that you’re now you’re now while you’re now in the red. Now insiders usually depending on how long they’ve been with the company they didn’t put anything into it. So $17 is still greater than zero. And so when they’re able to start selling their stock which again began three months there’ll be more people coming six months. You know there’s going to be these different tranches and they’re going to want to get out and the people that have not been there long are only getting stock probably at $17. So they’re not going to be able to sell for a profit but all the insiders still want to sell, And if that you know if they can’t hold then, So what happens basically is there is there is no market underneath for $17 so in potential it could go all the way you know to nothing. We’re not saying it’s going to go to nothing but this is something to watch I think over the next few months is if snapchat does close on a month end, so look at the stock, You know July 30 August 31st or first September 30th etc. if it does not if it if it finally closes on a month Below $17 this could be in real trouble. And so I just want to point it out that the mechanisms of the way stocks come public is important here to understand and most people don’t really understand that $17 is a key point.
Tony: [00:08:54] OK. So that I mean that’s a fully technical perspective.
Matt: [00:08:58] So while it’s not technical it’s more fundamental because that’s where the stock was issued. So in other words, when they did their homework they could have made it $20 that could have been $15 but they decided at $17 because they have some supply/demand matrix that they come up with I’m sure.
Tony: [00:09:17] OK.
Matt: [00:09:17] So it’s not exactly scientific but it’s pretty close. So they wanted to price it. Usually aggressively. So when it opens it opens higher. Right? Which it did. But that was the high and it hasn’t seen that price since. I’m not saying it can’t go back there but either there’s got to it’s going to have a lot of work to do because to me you’ve got a declining user base again. Again, When they came public the last couple of quarters like they’re not growing in the number of people using their product.
Tony: [00:09:48] And that’s what I’m wondering as to the fundamental thing is that’s fine because the value they create. Right. I mean what are they selling.
Matt: [00:09:55] Exactly.
Tony: [00:09:56] To investors.
Matt: [00:09:56] I mean answers exist while they are selling and again they’re calling themselves a camera company.
Tony: [00:10:02] And they own the technology behind that I guess the facial recognition.
Matt: [00:10:05] But to me I don’t really see the camera out there in Mass I don’t see spectacles out in mass. So you’ve been public for six months and what you say you , So what are they using that money for. I don’t know. You know they’re obviously bleeding money. They’re not they’re not liquid. So don’t think the only people that have benefited as the original founders who were there early and often and they’re able to sell their stock. Everybody else right now is pretty much underwater.
Tony: [00:10:31] I know we’re getting real close but didn’t Facebook had a similar profile of this before taking off?
Matt: [00:10:37] Couple It may have it may have I don’t recall. One way to look at it again. It may have to be a good it’s a good comparison. I don’t mean to you know but I don’t think snapchat is a Facebook competitor. So you know it’s good to look at the stock but always understand where IPOs are priced. I understand who you are again who bought stock. Right. You want to know were banks buying it or was it individuals. This wasn’t a big offering it wasn’t big. You know they sold quite a bit but not a ton. So there could have been you know it’s interesting again because I think it’s more of an insider deal than it is in an investor deal. So anyways let’s leave it at that. snapchat. We’ll come back and we’ll talk about in the future. But thanks for coming on again today Tony and giving us your perspective on snapchat. From a marketing perspective and thanks for your time. We’ll see what happens with it.
Tony: [00:11:32] Thanks man.
Matt: [00:11:33] Until next time send us your questions and we will talk soon.
Matt: [00:11:39] Thanks for listening to the “One Minute Trader” podcast. I hope you tune in again next time. And if you have any questions drop me a line directly at [email protected] That’s [email protected] and if you have any questions send those and an e-mail also. And I’d love to get your responses and hopefully any questions that you have will end up in the podcast at some point. So send us all your questions. And as always if you’d like to receive our five minute daily videos just sign up at www.oneminutetrader.tv . It’s real simple. Less than a latte a day. You’re going to get a great idea. That will give you an actionable moment in the marketplace it could be stocks that could be futures that could be options. There’s a lot of ways to make money. We’re here to help you in a short amount of time. So sign up and we look forward to you coming back and listening next time.