The "Social" Tech Bubble?

In my last post, I reiterated a lot of what the ADWEEK article laid out for Snapchat’s analytics. The hope is that they can use these tools to generate revenue; revenue however is not the same as profitability and Return of Investment (ROI) Is another situation entirely.

The data tools, if used properly, can allow Snap’s outside advisers to guide it to new customers; unfortunately, Snap is looking to invest in the UK and US markets. The ROI component comes from (usually) emerging markets. It will remain to be seen if not going truly global will be detrimental to the future of Snap Inc.

When dealing with these tech companies that are so reliant on ad revenues for their existence it is hard to see how a photo app and camera sales equate to an 18 multiple on valuation Facebook was a 9 (multiple) to put it in perspective. The investors who deviled heavily into this companies IOPs are going to need to see Snap generate somewhere around $20b in the next 3 years; it’s likely those consumer dollars are not currently in the market at least not for a company reliant on mainly on Western sales. These overvaluations and poor returns are lost investors equity, and its fund managers and pensions gambling with everyday people’s money, that’s the bubble I’m afraid of.