WASHINGTON: We’ve been out of commission for a couple of days dealing with personal business. But we’re back covering Tuesday’s schizoid stock market. Case in point: The shares of Snapchat’s parent company, symbol SNAP. They tanked Tuesday. Big time.
Here’s a bit of history. The arrogant executives of SNAP kept nearly all the company’s voting rights when the stock IPO’d in March 2017. We complained about it vociferously, as we despise this increasing trend in tech IPOs. Nonetheless, we put in for IPO shares just for the heck of it, and, for once in our lives, we got 100 shares of this shaggy dog.
Required (more or less) by our discount brokerage to hold the shares for 31 days rather than flip them, we actually managed to eke out a gain in our SNAP holdings. We promptly dumped the shares for a profit at the first opportunity, figuring that this amateur-hour company might last as long as the late, not-so-lamented A123.
That Michigan-based commercial battery-making enterprise, forcefully supported with your taxpayer dollars by that ocean-saving, Nobel Prize-winning Lightworker, President Barack Obama, slithered off into bankruptcy and oblivion less than two years after its IPO. A123’s carcass and its various technologies were later bought for pennies-on-the-taxpayer-dollar by – wait for it – a Chinese company.
We knew a dog when we saw one, and once again, we kinda, sorta lucked out. We were allocated 100 shares of the A123 IPO. Like our briefly-held holdings of SNAP, we dumped the A123 shares as soon as we could, once again for a profit. The inevitable happened after we were long gone.
Did the taxpayers get any money back? That, of course, is an intuitively obvious rhetorical question. No wonder the Chicoms are killing us in the Trade Wars. (Which actually started a long time ago.)
Back to topic one. As far as we know, those essentially non-voting SNAP IPO shares were not underwritten by American taxpayers, thank God. They were, umm, snapped up by funds, corporations and a mob of hapless millennials. They were enchanted with the hot product of the moment, it seems, so gave Wall Street’s virtual slot machine a try. Guess they figured SNAP had to make them money. It’s so cool.
Hopefully, the younger set has now gotten that kind of nonsense out of their investing systems. Yeah, “smart” arrogant millennials like SNAP CEO and co-founder Evan Spiegel can make dumb mistakes too, just like all those increasingly doddering Boomers on Wall Street. See how Evan’s dumb mistakes worked in the chart below.
CNBC’s oft-reviled Jim Cramer rather colorfully sums up the details of SNAP’s miserable quarter and apparently worse earnings conference call.
“Jim Cramer was unimpressed by the performance of Snap’s leaders on the company’s post-earnings (er, post-loss) call with analysts on Tuesday night.
“‘I thought this was a ‘Saturday Night Live’ parody of a conference call,’ Cramer said Wednesday morning. ‘I just didn’t think it had anything like a real conference call.’
“Cramer said he was particularly perplexed by a comment made by Snap Chief Strategy Officer Imran Khan who said the company is having challenging conversations with its advertisers. The host of ‘Mad Money’ said that basically means Khan was saying: ‘Hey, advertisers, will you sign up with us? No.’
“Shares of Snap plunged 20 percent to $11.30 at the open on Wall Street on Wednesday, hitting all-time lows, after the social network late Tuesday reported revenue and daily active users that missed forecasts. The quarterly loss matched estimates, but forward guidance was weaker.”
Cramer had commented earlier that SNAP’s Royal Smart Guys “were spending money like a boatload of drunken sailors.”
To anchor its evaluation, CNBC noted that “Snap, the parent of Snapchat, went public on Wall Street in March 2017. On Day 1, it closed up 44 percent at $24.48 per share.” Wednesday, in 2:30 p.m. trading action, SNAP shares are down 21.5 percent ($3.03 per share) from Tuesday’s close, and currently stand at a miserable $11.10 per share.
Summing up SNAP
ZeroHedge also notes today’s SNAP disaster. But ZH’s pathologically nasty – and very often funny – commentators don’t even bother to pull their punches. Here’s a pair of these financial mad-libs:
“A business, with a leader that tells you they may never turn a profit, before they even IPO, is not one to buy…”
“This [Snapchat] is another one of those apps that will fail due to idiocy at the company itself. As app providers try and tie into more and more ad revenue they ruin what was interesting about the app and as we know kids these days have zero attention span so they move on to the next thing asap.”
Apple and the Fed report, market continues to sink. Oh, well
In other Wall Street news, Apple (AAPL) reported swell profits, despite all the pathological iPhone nay-saying from investment gurus who were obviously short the issue.
The Federal Reserve report, released at 2 p.m. has, at the moment, given a slight boost to the market as the nation’s central bank did not raise interest rates. For now. We’ll see how long that lasts. As we write this column, the Dow is up a small fraction of one percent. The S&P 500 is down about the same. And the tech-heavy NASDAQ, goosed by Apple’s large numbers, is up only slightly more than the Dow. Now there’s investor conviction for you.
Let’s wrap this report up with a couple of bizarre headlines, via CNBC.
Headline number one:
“Ford CEO Hackett’s decision to dump cars ‘may prove fatal’”
Seriously. Despite what you read in the news, Ford is NOT “dumping cars.” It only plans to dump the bulk of its sedan lineup, in favor of SUVs, compact SUVs and its popular line of heavy duty trucks. Thing is, those SUVs count as “trucks” in the Federal government’s bizarre fuel efficiency formulations. I.e.,Ford’s gotta define small SUVs like the Escape as “trucks” since Uncle Sam says so. Hence, the above fake news headline.
Thank you, sir, for that fine fake headline. May I please have another?
“Market correction of 30-40% could be coming soon, investment guru Mark Mobius warns”
You’ve gotta love it when rich market mavens like Mobius (is that his real name?) come up with these idiotic proclamations. Sure, a market correction of 30-40 percent “could” be “coming soon.” But how soon? Tomorrow. Next week? Next year? In 2030?
Most sweeping market predictions will eventually come true. But that weasel word “could” is the tell that this is sensationalist BS. Mobius and his money are probably net short right now, which isn’t a bad idea in this market. But why should we read that remark by a Royal Smart Guy, then panic and sell – for a loss – a chunk of our portfolio, which likely consists of holdings Mobius has already shorted.
Why these clowns are permitted to talk their book with impunity – often panicking small investors out of holdings the clowns have already shorted – we will never know. There are laws on this sort of market manipulation. But you’d never know it.
We’re not necessarily singling out Mobius here. There are even worse perma-bears out there, always trying to scare us little guys out of our favorite stocks so those stocks will tank and give the gurus another obscene profit on the short side. They are best ignored, at least in the short term.
Problem is, new investors apparently need to get burned by listening to these guys at least once or twice. We just hate to see that happen, particularly when there’s once again some chance that America’s middle class might be able to prosper and survive. Except if we actually get tangled up in a real trade war.
More as it happens.