Yesterday I received two separate calls from Silicon Valley types, taking me (and my media peers) to task for expecting Snap's IPO to be "successful." In short, they don't believe the numbers add up.

"Successful" is a tricky term when it comes to IPOs, particularly since different companies list for different purposes (capital raising, employee liquidity, market cachet, etc.). But these folks were essentially saying that if Snap does manage to price at around a $20 billion valuation (fully diluted), it will have a very difficult time maintaining that past the lock-up period (at least for a while).

Basically it's a math question. If Snap is unprofitable and generated around $400 million in 2016 revenue (which is a reported estimate, not a fact), then it would have to trade at a 50 multiple of revenue. There have been some rumors that Snap had a bang-up Q4 that could push the total closer to $600 million, but even that would mean in excess of 33x.

For comparison's sake, Facebook went public in 2012 at around a 23x revenue multiple, and that company already was generating $1 billion in annual profit. Today, Facebook is at only 12.9x revenue.

Obviously the argument here will be growth curve, but how long will public equity investors be willing to value eyeballs over dollars? Particularly without voting rights? Even if you accept projections that Snap could hit $1 billion in revenue next year, the base IPO valuation of $20 billion would still be nearly 2x where Facebook is currently trading, and that's assuming shares don't budge a cent.

None of this is to say that Snap won't surprise all of us when its financial do become public, or that it won't grow into its valuation over time. But it is to say that the company's valuation rocket may need to take a breather.

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