Is a corporate culture that encourages “the type of kindness that compels you to let someone know they have something stuck in their teeth even though it’s a little awkward” a good investment opportunity?The description comes from Snap Inc.’s (NYSE:SNAP) S-1 filing for its upcoming IPO.Michael Kors promo code In the document, founders Evan Spiegel and Bobby Murphy emphasize the company’s focus on providing employees the space and courage to create in a supportive environment as well as its belief in giving back to society. The filing also reveals that the company has no headquarters (operations are “dispersed through various cities”), doesn’t like the media, and that the IPO will offer no voting stock. Last but certainly not least, the financial information reflects net losses of $522 million.
The point here is not to cast aspersions on Snap’s vision or its plan to go public. Data from the firm Dealogic shows that Snap is expected to raise more money than “all venture capital-backed firms joining the public markets in 2016.” A recent article in the Financial Times, however,Michael Kors promo code describes Snap as a company that is “reaching out to the public markets even as it loses money hand over fist.” Still, it says, both Snap and its bankers think investors will ante up “tens of billions of dollars.”
This scenario underscores a ubiquitous investing conundrum:Michael Kors promo code Is an exciting, media-hyped stock necessarily a good investment opportunity? New research conducted by Charles Lee and Ken Li of Stanford University suggests that skepticism might be in order. Their data suggest that those companies most likely to issue stock have a history of “negative return-on-assets, high valuation multiples, previous capital raises and ‘positive price momentum’.” Not surprising, since those are the companies most in need of a capital injection. But it may not bode well for potential shareholders. Lee and Li argue that companies with “sexy” products can lure investors into overpaying.