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Comment by bigtones | Hacker News Reader

A loss of $3.45 Billion for the year - that is absolutely mind blowing. That is a net loss of USD $393,000 per hour for every hour of 2017.

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Eh, it was all booked in 2017. But almost $2 billion of this loss actually accrued over many years as stock options compensation.

Hello 1999!

No, in 1999 most public tech companies didn't account for stock options in that way. They pretended they weren't an expense, boosting their profitability figures. Although the dotcom bubble arguably played a big role in finally causing a shift in that accounting practice.

https://hbr.org/2003/03/for-the-last-time-stock-options-are-...

Companies don't die when they lose money. They cut expenses or they get acquired. Companies die when they have no revenue. If I were an investor in Snap I would much rather see them raise revenue then cut expenses or decrease loses. Their loses are considered in the stock price.

It's clearly not that simple. Barring an absolutely horrendous product, one can almost always purchase $100 of revenue for $105.

5% might be a little low, but you do make a valid point that you cannot make a business selling at a loss.

Like other people have mentioned, this is mainly stock compensation related, but the funniest part is that they tag this loss % as "Not meaningful" in their financial statements. Just a not meaningful $2B loss :)

To be fair, it's a pure accounting loss, not an actual loss (of money in the bank) for the business. So in that respect it doesn't seem unreasonable to do.

Those losses are very common during the IPO year. Snap acquired a couple of startups using that money.

Snap is the only innovative social media website right now. Let's see how they do in future

Put another way, this is roughly the cost of walking through a town at 0.1 MPH, destroying every house you come across.

you don't destroy the house, you transfer it from investors to employees, largely executives.

reason is, the "loss" isn't cash outflow, it's from compensation by creating stock, which investors pay for via dilution.

I'm not suggesting the wealth actually is being destroyed in this case. It's a mental heuristic for comprehending large amounts.

A billion dollars isn't an amount of wealth that has any real meaning to my brain compared to things that happen in my life. On the other hand, I have a very real and personal understanding of about how much a house is worth. From that, it's reasonable to get a gut understanding of an amount of cost by imagining houses being destroyed at a certain pace.

I visualise $1b as about the cost of building a shiny new casino in Vegas, or a large cruise ship.

I like these comparisons because I can see them, and marvel at the sheer bigness of them.

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