There is no technical data on this newly minted IPO, so any comments I make are purely anecdotal and for amusement only.

If you’ve been around the markets for a while, you will have experienced breathtaking optimism, such as we see today, or despondent weakness, as seen as recently as the spring of 2008. At the depths of any market bottom we are exposed to despair and daily hits of bad news.  At the heights of market giddiness, valuations become a relic of history and instead growth is the defining yardstick…which is flexible.

Today’s premiere of the much anticipated media company, Snapchat, symbol SNAP is sure to set many milestones as well as create dozens of new millionaires and likely the odd billionaire.  The stock was priced at $17 and quickly rose to over $24 as of time of writing.  At this valuation, on a trailing earnings basis, SNAP makes Facebook, Netflix and Amazon look like savings bonds. For those unfamiliar with the company, here is a description of their business from Google:

Snap is a camera company.  The company’s flagship product, Snapchat, is a camera application that helps people communicate through short videos and images, known as a snap.  The Snap chat phone app burst on the social media scene by allowing users to take photos and videos, attach messages and send them to other users.  The twist: The messages disappear in a few seconds unless the receiver captured them.

Naturally, healthy skepticism has come forth from many sane analysts deriding the valuation as being a sign of speculative froth in the markets.  Certainly the irony of an issue that is predicated on something disappearing suddenly is not lost on them. We’ll have to take the word of the astute investment bankers that underwrote the issue, since they must see an entire world of Anthony Weiner types who would benefit from such an app.

But because I have shoes older than some in the stock business, I offer an old apocryphal story about speculation, source uncertain.  It seems that there was a wine importer who bought a hundred crates of sardines at 50 cents a can thinking he can make a killing.  First time around, he did just that, selling the entire shipment to a supermarket for $1.00 a can. The next time around, he bought twice as many sardines at 75 cents a can, again selling them for a hefty profit.  But when a buyer opened a can, tasted the goods and found them inferior, he called the next day to ask for his money back.  The wine importer replied, “Those sardines aren’t for eating- they’re for trading!”