It's worse than that, because your basis is not anywhere near $0 unless you're Evan and his bros. If you're an engineer who has worked there for 2-3 years you are probably getting near (or already below) your strike.
That said, if you're an insider still, you probably feel it's going to get better, so you hold. You're used to shares being illiquid and it's easy to continue seeing them as such. Plus, you get some bonus cash with follow-on RSU grants that are certainly being doled out.
I read that most employees have a strike price above $15. I think this is an unmitigated disaster for employees, especially with the vote structure etc prohibiting the board or any major investor taking influence.
I personally would probably recommend to cut losses and run - it looks more like Groupon, Gopro or Twitter right now than anything else.
Who is to blame? CEO and underwriters for overpricing their IPO? To me it looks like Snap was simply strangled by Instagram in the worst moment. The last private round was priced when it still looked like Snap would continue growing explosively, IPO was hence massively overpriced and employee options as well.
It probably is not helping company moral right now that the CEO gave himself an $800 million bonus for the IPO.
[rhetorical question] How is it possible that a company has tens of millions of users, IPOs, and the common stock is worthless? That's basically theft from your employees. Any early employee at a company as successful as Snap should be making a small fortune in stock options.
The common stock isn't "worthless", it's the stock options to later-stage employees that are possibly worthless, or at least worth less than imagined. The lesson here is to never rush to judgement about the value of your options at a startup. You need to think about "how much more will the company be worth when I exercise vs how much it was worth when I joined", vs the less meaningful "I have XXX dollars worth of options".
And yes, I am aware of the inherent discount for ISOs, so as an employee you still stand to make about 2/3rds the value of your options if the company is worth about as much as it was when you joined. This makes me a little suspect of the stated $15 strike price for ISOs, that doesn't sound like the typical 2/3 discount unless if the stock was privately worth $30-45/share at grant time.
[rhetorical answer] By offloading as much economic risk as possible on to producers with the least means of asserting corrective action in case of inequitable decision making.
(In other words pass losses on to employees and guarantee [as much as possible] returns to investors despite risks.)
That said, if you're an insider still, you probably feel it's going to get better, so you hold. You're used to shares being illiquid and it's easy to continue seeing them as such. Plus, you get some bonus cash with follow-on RSU grants that are certainly being doled out.