Jan 24, 2017

Snapchat IPO won't spark a gold rush

Snap is expected to publicly file its IPO documents any day now, which would start the official clock on an offering that is most likely to occur at the beginning of March. If successful (i.e., raises up to $5 billion at around a $20 billion valuation, and then trades higher), then there will be much rejoicing among Snap execs, employees and venture capitalists.

But that's it. Don't expect Snap to spark a broader tech IPO rally, despite the fever dreams of some in Silicon Valley.

For a startup to have IPO "legs," there need to be other startups with similar characteristics. Snap, however, is unusual for three primary reasons:

  1. Snap is valued more highly than all but three other U.S. startups (Uber, Airbnb and Palantir). That means it won't have any trouble getting analyst coverage (a major challenge for smaller tech companies) and also that it will be attracting deeper institutional pockets than would a much smaller company.
  2. Snap is essentially a consumer-facing social network, in an age when the only other privately-held social network of note (Nextdoor) is exponentially smaller. Other tech companies won't be able pitch mutual funds and hedge funds by saying "We're a lot like Snap."
  3. Snap's user metrics are said to be off-the-charts, particularly in terms of growth. We'll need to wait for the public filing to see validated specifics ― plus how Snap views increasing competition from Instagram ― but almost every one of the company's private investors has privately gushed about these figures (which haven't necessarily translated into revenue... yet).

Moreover, we can look at the recent history. Facebook went public in the second quarter of 2012. Yes the offering had some major hiccups (some of which were Facebook's fault, some not), but the upshot was that fewer companies actually went public in the second half of 2012 than in the first half. Moreover, fewer companies went public on U.S. exchanges in all of 2012 than in 2010 or 2011. Mark Zuckerberg might have made going public cool again, but most founders remained at their less popular tables.

Caveat: 2017 is expected to be a strong year for tech IPOs, but it's correlation to Snap rather than causation. There is a massive glut of VC-backed tech startups on the sidelines, many of which would have priced last year if not for macro factors (e.g., China econ data, Brexit, U.S. presidential election) that scared off their bankers. And a large percentage of this backlog is for enterprise software startups, which means a better bellwether could be AppDynamics (which this morning boosted its proposed offering range, and is expected to price tomorrow night). [Update: Never mind]

Go deeper

U.S. coronavirus updates: Death toll nears 11,000

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Andrew Witherspoon/Axios

Recorded deaths from the novel coronavirus surpassed 10,900 in the U.S. early Tuesday, per Johns Hopkins data. More than 1,000 people in the U.S. have died of coronavirus-related conditions each day since April 1.

Why it matters: U.S. Surgeon General Jerome Adams said on Sunday this week will be "the hardest and saddest week of most Americans' lives" — calling it our "our Pearl Harbor, our 9/11 moment."

Go deeperArrowUpdated 21 mins ago - Health

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 11:30 p.m. ET: 1,347,803 — Total deaths: 74,807 — Total recoveries: 277,402Map.
  2. U.S.: Total confirmed cases as of 11:30 p.m. ET: 368,196 — Total deaths: 10,986 — Total recoveries: 19,828Map.
  3. Trump administration latest: President Trump's economic adviser Peter Navarro warned White House colleagues in late January the coronavirus could take over half a million American lives and cost close to $6 trillion, memos obtained by Axios show.
  4. 2020 update: Wisconsin Supreme Court blocks governor's attempt to delay in-person primary voting delayed until June.
  5. States latest: West Coast states send ventilators to New York and other states with more immediate need — Data suggest coronavirus curve may be flattening in New York, Gov. Andrew Cuomo said.
  6. World update: U.K. Prime Minister Boris Johnson moved to intensive care as coronavirus symptoms worsen.
  7. Stocks latest: The S&P 500 closed up 7% on Monday, while the Dow rose more than 1,500 points.
  8. What should I do? Pets, moving and personal health. Answers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk.
  9. Other resources: CDC on how to avoid the virus, what to do if you get it.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

Docs: Navarro memos warning mass death circulated West Wing in January

Image from a memo to President Trump

In late January, President Trump's economic adviser Peter Navarro warned his White House colleagues the novel coronavirus could take more than half a million American lives and cost close to $6 trillion, according to memos obtained by Axios.

  • By late February, Navarro was even more alarmed, and he warned his colleagues, in another memo, that up to two million Americans could die of the virus.

Driving the news: Navarro's grim estimates are set out in two memos — one dated Jan. 29 and addressed to the National Security Council, the other dated Feb. 23 and addressed to the president. The NSC circulated both memos around the White House and multiple agencies.

Go deeperArrow2 hours ago - Health