Charitable IPOs - SNAP (fund, margin, dividends, buying)

[artillery77]

When I was a kid, I collected ball cards. For a long time, they were just pictures of my favorite ball players with some stats. Then, people started to think they were worth money. After a time, most of them returned to just being pictures of my now retired favorite ball players with some stats.

I'm reminded of that as I look at the prospectus for SNAP. SNAP has an exciting product to be sure, and I think the company has real potential to put some serious competition in vs Facebook. But as I read the prospectus, I can't shake the feeling that I'm not really buying anything. I'd be buying shares with no voting power, that pay no dividends for the foreseeable future in a company that is still losing money on the gross margin and dependent upon a sole manufacturer for its product.

Further is the proceeds of the sale. The existing shareholders are selling to capture the taxes that are part of their exercise of RSUs, and 25% of the shares are from the existing shareholders (mostly the founders). While the 0 voting strength is offered to not dilute the founders, buyers are warned of potential acquisitions where they may be diluted.

I'm not saying buyers of SNAP won't make money. It's a hot product, but I'm getting rather tired of these companies selling ball cards and calling them shares. Am I just old school in this?

[Free-R]

I think your analysis is spot on. I missed my chance on Facebook @ $19 a share, and this would otherwise look appealing if not for the no voting rights, but I've learned my lesson on "exciting" stufff like this. Maybe it does well, maybe it doesn't. It just comes across like the founders get free public funding with no risk to their business ownership, and that seems a bit arrogant to me.