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Analysts slaps 'NEUTRAL' on Snap's stock ahead of its IPO

Evan Spiegel

Snap Inc. took its initial-public-offering road show to London on Monday, looking to persuade potential UK investors to buy up the company’s stock, but one London-based analyst remains “neutral” about the company’s ability to drive upside beyond its initial price range of $14 to $16 a share.

Atlantic Equities research analyst James Cordwell did not attend the presentation on Monday but spoke with clients who did. (Atlantic Equities is also not one of the banks underwriting Snap’s IPO.)

In a detailed research note, Cordwell set a $14 price target for Snap’s stock for the end of this financial year. That would imply a market cap of $19.5 billion.

He said while the Snapchat app was an “impressive ‘made for mobile’ service” that was popular among young users, it would be difficult to expand its audience base beyond this demographic. And, all the while, competition is intensifying from Facebook, which is adding Snapchat-like features to many of its major properties, including Instagram, Messenger, and, most recently, WhatsApp.

Cordwell wrote: “With expansion beyond the core audience likely challenging, sustainability of engagement concerns to persist, and margins structurally lower than peers, we do not see upside to the $14-$16 IPO valuation range.”

Revenue projections

Snap generated $404.5 million in revenue in 2016, according to its S-1 filing with the Securities and Exchange Commission. Cordwell thinks that may rise to $1.13 billion this year. Cordwell projects revenue will increase to $2.16 billion in 2018, rising to $3.03 billion in 2019.

Snapchat’s average revenue per user is less than 15% that of Facebook, a fact Cordwell said demonstrated a “clear opportunity for significant near-term revenue growth.”

But Cordwell assumes Snap will reach only 55% of Facebook’s current monetization level by 2020, given Snapchat’s heavy skew toward developed markets, its demographic skew toward younger users who are less likely to spend on advertisers’ products, and the smaller amount of user data Snapchat has compared with Facebook, which could limit its potential among direct-response advertisers.

atlantic equitiesSnapchat will need to match Facebook’s monetization levels on a per-hour basis if it is to ramp ad spending beyond the $2 billion a year at which Twitter began to run into revenue growth issues, Cordwell predicted.

Smaller margins compared with its peers

Snap’s margins are lower than its peers’, a reality Cordwell says is owing to the infrastructure costs required to deliver messaging centered on videos and photos, the revenue it shares with publishers in exchange for their content, a focus on direct sales versus self-serve, and its research-and-development costs.

Cordwell predicted Snap wouldn’t reach non-GAAP (generally accepted accounting principles) profitability until at least the end of 2019 — with its GAAP operating margin in the long term unlikely to be higher than 15%. By comparison, Facebook is at about 45%.

atlantic equities snapSnap posted adjusted EBITDA (earnings before interest, tax, deprecation, and amortization) loss of $459.4 million in 2016. Cordwell predicted that loss would widen slightly to $482 million in 2017 before coming down to $184 million in 2018 and then turning to profitability of $44 million in 2019.

“Our price target effectively assumes Snap trades at over 50x FY20 EBIT (earnings before interest and tax) multiple at YE19, well in excess of the historical range of this metric for Facebook, though Snap’s margins still likely to be below structural potential at this point.”

Cordwell says Snap will need to gain better leverage on its tech spending and improve its sales efficiency to become profitable.

Snap has been pitching itself to investors as a “camera company,” which would imply that it does not want to become wholly reliant on ad sales in the future. So far, Snap’s only hardware product is Spectacles, the camera glasses it launched last year that are available only in the US.

Cordwell doesn’t think Snap’s hardware products will be a near-term profit driver, but he notes that new products focused on “mixed reality” could help drive the company’s stock multiple.

He writes: “To drive upside to the IPO range it seems necessary to believe Snap can leverage its AR (augmented reality)-style features and hardware efforts into a strong position in ‘mixed reality’, but it seems too early to attach value to this opportunity.”

Earlier on Tuesday, Reuters reported that while investors attending the London leg of the Snap IPO road show were impressed with “sleek” presentation, some were disappointed the company did not provide projections on future revenue and advertising share.

SEE ALSO: Some investors who attended Snap’s London roadshow voiced big concerns

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NOW WATCH: The fabulous and charmed life of 26-year-old self-made billionaire, Snap CEO Evan Spiegel

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Here's everything we know about Nintendo's new $300 console coming this week, the Switch

After years of waiting, Nintendo finally has a new video game console on the way: the Nintendo Switch.

nintendo switch

It’s a hybrid console — you can play it at home on your living room television, or you can take it on the go. Here are the basics:

  • It’s called Nintendo Switch.
  • It’s scheduled to launch on March 3.
  • It starts at $300.
  • Nintendo has a gaggle of games starring its most prominent creations in the works.

There is, of course, much more to the Switch than that. We’ve finally got our hands on one, and have lots of to tell you. Here’s everything we know about the Nintendo Switch:

SEE ALSO: I spent 48 hours with Nintendo’s new game console, the Switch — here’s what it’s like

This is everything that comes in the $299 package.

Here’s what’s in the box:

• A Switch tablet — the console itself is the tablet.

• A set of Joy-Con controllers.

• The Switch dock, for connecting to your TV.

• The Joy-Con dock/gamepad.

• Two wrist straps for making sure you don’t lose the Joy-Con while playing a motion game.

• Two cables (power and HDMI).

There are two bundles that each cost $300. One has a blue and a red Joy-Con, and the other has two gray ones.

Here’s a good look at the Nintendo Switch dock and the Joy-Con Grip gamepad.

What you see above is exactly what’ll come in the box when Nintendo Switch arrives on March, 3: the Nintendo Switch dock, the tablet-like console, and a home gamepad with the detachable Joy-Con in tow.

Notably, the controller is called the Joy-Con Grip. Since you can detach each of the Joy-Con bits and attach them to the Switch tablet, the Grip turns the Joy-Con into a more traditional gamepad. Unfortunately, the Joy-Con Grip that comes with the Switch isn’t capable of charging the Joy-Con — you need to re-connect them to the Switch tablet while it’s docked to charge the Joy-Con.

Of note: Everything in the package is also sold separately. Want another dock? You can buy one. Need just a left Joy-Con? Can do. Nintendo breaks it all down on its site.

See the rest of the story at Business Insider

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This high-tech bracelet will let you touch your long-distance partner from afar

Hey bracelet

Anyone who’s been in a long-distance relationship knows that not being able to touch your partner for weeks or months at a time is one of the toughest parts. 

While technology has caught up in other arenas — video chatting has never been easier and apps that help you find cheap travel are a dime a dozen — long-distance touch is essentially the final frontier. 

To help solve that problem, a Dutch tech company called House of Haptics has created the Hey bracelet, a wearable that lets you send touch over long distances. 

Before your mind descends into the gutter, the Hey bracelet is not a sex toy. It’s worn on your wrist and is meant to simulate a “gentle squeeze,” not a vibration or buzzing sensation. 

The Hey bracelet launched on Kickstarter about a month ago, and is not yet available to purchase. While there’s no guarantee it will ever come to fruition, here’s how the House of Haptics team envisions it working. 

SEE ALSO: Google helped build an app that designs you a personalized dress based on your lifestyle

The Hey bracelet comes in two colors: white and rose gold, or black and anthracite. The company plans to add red, blue, and green if it reaches its stretch goal of 2,000 backers on Kickstarter.

When you order a set, it comes with two bracelets (one for you and one for your partner) plus a charging cable for each bracelet.

The bracelets pair with your phone via Bluetooth. When you send a touch to someone, it’s sent to the Hey app on your phone, which is then transferred to your partner’s app and the other bracelet.

Eventually, the Hey app will run on both Android and iOS, the company says. 

See the rest of the story at Business Insider

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12 features you probably didn't know exist on WhatsApp (FB)

Brazil Whatsapp messaging ban

WhatsApp’s core messaging function is pretty easy to use.

But there’s a lot more to the Facebook-owned messaging service — which surpassed 1 billion users in February 2016 — than most of its users possibly know.

We take you through some of its most useful but less well-known features, including how to get WhatsApp on your computer, how to switch phone numbers on your account, and its newest Snapchat-like feature “status.”

1. Stop photos and videos you receive in chats (WhatsApp media) from automatically downloading onto your phone and taking up precious space.

On an iPhone, go to Settings > Privacy >Photos > Tap to toggle off the WhatsApp button

2. Use WhatsApp on your computer just like you do on your phone with the web app “WhatsApp for Desktop.”

Click on this link to download WhatsApp for your computer and follow the install instructions.

You’ll need to scan the barcode from the WhatsApp app on your phone to set it up. It’s pretty simple.

In your phone’s WhatsApp app, go to Settings > WhatsApp Web/Desktop and scan the barcode on the desktop app. 

See the rest of the story at Business Insider

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Paris' giant Station F startup hub has delayed its opening because of flooding

Station F flood

Station F, the 366,000 square foot startup hub due to open in Paris, will open its doors later than expected because of a flood.

A pipe underneath the building burst on Friday last week, according to a blog post from Station F

This is what happened, according to the post:

Unfortunately and unexpectedly, on Friday afternoon, a pipe burst in the sublevels under Station F. This incident happened during the initial operating of the pipe and therefore cannot happen again once Station F opens.

We were able to quickly respond but we now will need to repair and replace some of the equipment that was damaged before opening to the public.

Station F plans to house around 1,000 startups and was due to open at the beginning of April. Now, according to the post, it will delay its opening by “a few weeks”. A spokesperson was unable to confirm when exactly the building will open.

Station F

Facebook was due to be one of the first occupants at Station F, with a startup incubator for around 10 to 15 companies and 80 desks. It isn’t clear whether the flood affects the company’s plans to move in as scheduled, and Facebook hasn’t immediately responded to a request for comment.

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NOW WATCH: Watch 6 hours of Winter Storm Niko in under one minute

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The 18 most congested cities in Europe

paris, france

Navigation company TomTom published a list of the most congested cities in the world this week — and many of Europe’s busiest cities featured on it.

The TomTom Traffic Index is based on 19 trillion data points collected over nine years from 390 cities, according to the Dutch company.

Each city’s congestion level was given a percentage score out of 100, with levels ranging from 66% in the most congested cities to 9% in the least.

TomTom defined the congestion level as the “increase in overall traffic times when compared to a free flow situation (an uncongested situation).”

Ralf-Peter Schaefer, VP TomTom Traffic, said in a statement that the traffic index is “designed to help drivers, cities and transport planners to understand traffic congestion and, most importantly, how to reduce it.”

Here are the 18 most congested cities in Europe.

18. Hamburg, Germany (33%)

17. Ankara, Turkey (33%)

16. Naples, Italy (33%)

See the rest of the story at Business Insider

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UK chancellor Philip Hammond is being asked about Uber's tax arrangements

philip hammond

Uber is facing yet more scrutiny from politicians this week after an MP questioned whether the company was paying enough tax.

Labour politician Iain Wright tabled a written question in parliament on Friday, asking chancellor Philip Hammond whether he had calculated the potential VAT owed by Uber.

He wrote:

“To ask Mr Chancellor of the Exchequer, what estimate he has made of the potential VAT owed to his Department in respect of supply of passenger transportation services arising as a result of the employment tribunal ruling of 28 October 2016; and if he will make a statement.”

The chancellor has yet to respond.

Wright’s question came after Jolyon Maugham, a respected UK barrister, announced he was suing Uber over allegedly failing to pay millions in VAT.

Maugham has calculated that Uber owes at least £20 million in taxes, though it could avoid paying up if it changes its company structure. Uber, in response, has said its drivers are subject to the same VAT laws as other transportation services.

Maugham, who is suing Uber through his organisation the Good Law Project, said his case was strengthened by last year’s employment tribunal ruling that Uber drivers — currently classified by the company as self-employed — were actually employees.

Speaking to Business Insider, Maugham said he welcomed Iain Wright’s question.

He said: “There is genuine and proper public interest in the nature of the deals that HMRC is doing with big US multinationals. It is unfortunate that the government does not feel the need to recognise that public interest, and the purpose of this action is to bring a private conversation between Uber and the government into the public domain.”

Uber’s UK head of public policy, Andrew Byrne, has already appeared before MPs several times this year to explain the company’s business model.

Parliament’s ongoing work and pensions select committee is already examining whether newer companies like Uber, Deliveroo, Hermes, and Amazon are treating casual workers properly, and whether those workers should be considered full-time employees.

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NOW WATCH: Here’s everything we know about the iPhone 8

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Facebook’s mobile prodigy launches video charades game

show-tell Michael Sayman was just 17 when Facebook hired him, but he’d already built 5 apps. Now 7 years after his first launch, the Facebook product manager has just released Show and Tell, which turns selfies and visual communication into a game. You’re given an emotion to act out, you send the video to friends and they try to guess what you’re feeling. “I made 4 Snaps about… Read More

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Al Gore just sold $29 million of Apple stock (AAPL)

al gore tim cook

Former US Vice President Al Gore sold 215,437 shares of Apple this week at an average price of $136.72 per share — a transaction netting him about $29.4 million. 

This transaction was disclosed in a filing with the SEC, which you can read here. Earlier this week, Apple’s stock hit an all-time high of $136.68 and kept trending upwards from there.

The sales appear to represent a significant portion of Gore’s stake in the iPhone maker. According to the most recent Apple proxy statement, filed in January, Gore’s ownership in Apple is roughly 721,000 shares. 

But that figure includes stock options for roughly 276,000 shares scheduled to vest on February 1. It’s not clear if Gore has exercised his option to acquire those shares.

In the event that Gore has not exercised the new slice options, his stock sale this week would account for half of his stake in Apple. 

Gore serves as a member of Apple’s board of directors. Back in 2013, Gore attracted attention when he sold another $30 million worth of Apple stock

Apple did not immediately respond to a request for comment.

SEE ALSO: Apple hits another all-time high as Morgan Stanley predicts future iPhone with ‘longer battery life’

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NOW WATCH: Al Gore told us why he really should get credit for the internet

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Here’s how thoroughly the smartphone has annihilated other gadgets

Mobile World Congress, the smartphone world’s biggest conference of the year, kicks off in a few days. Though Samsung’s Galaxy S8 isn’t likely to make an appearance, several new, not-crazily-different phones are still expected to be on display.

With this year also being the tenth anniversary of the iPhone — which effectively kicked off the smartphone era — surveying the phones at MWC is also a good time to look back at how much the smartphone has altered the tech industry at large.

This chart from Statista shows one way of looking at it: Over the past decade, smartphones have made a number of once-popular gadgets all but irrelevant to society. While the dollar value of smartphone shipments has grown 536% in that time, those of the MP3 player, digital camera, and portable GPS have sank.

Still, time has a knack for not stopping: Recent sales figures now suggest the smartphone boom is over, and major tech firms are now hungry for new tech like augmented reality to eventually redo the cycle all over again.

smartphone devices killed chart

SEE ALSO: Samsung is still overloading the smartphone market

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NOW WATCH: Meet the forgotten co-founder of Apple who once owned 10% of the company

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