David Rosenthal: belief

Transcript context

…Right. I think actually now they’re selling it’s not just the vending machines with Spectacles. I think they sort of quietly stood that up online and you can order and ship now. I think that’s right. We’ve rattled on that but really quickly to cover and then wrap up on narratives, there are two other aspects to the sort of press narrative about Snapchat right now. One is that Snap has an infrastructure problem and it came out as part of the IPO that they’ve agreed to pay Google – they primarily run on Google Cloud Engine – $2 billion over the next five years. They’re also paying Amazon AWS another billion dollars to supplement that with AWS. As a result of all this spending relative to the still large and impressive but minor revenue they have compared to Instagram and Facebook, Snapchat’s actually gross margin negative or was until very recently. So their infrastructure costs were higher than the revenue they were making from advertising and that's before even paying any of their payroll cost or their hardware cost. Yeah. In fact, the losses are so huge. This may actually be the first company to file for an IPO that has a cost of revenue alone higher than revenue in the trailing 12 months before IPO.…

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