Snap, which rose to unicorn status based on a social media app that creates quickly vanishing photos, attracted solid investor interest in an IPO that raised $3.4 billion and sent shares up more than 50 percent above the initial offering price during the first day of trading today.
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In its opening minutes, its price hit $24.48 a share, a jump of about 40%.
Snap sold 145 million of its 200 million initial shares Wednesday, locking up the remaining float as a measure to mitigate potential volatility that often comes with short-term investors. Square, Twilio, Line and other high-profile tech IPOs from the last 18 months are each just a fraction of Snap’s market value.
Leonid Bershidsky said that out of 20 tech companies that went public in the U.S. in the last decade, nine are trading below the issue (IPO) price. The losses widened from $382 million 2015, though revenues spiked from $59 million.
Snapchat had 161 million daily users at the end of 2016, 10 million of which were in the UK. Venice residents and business owners are upset with Snap’s growth in the community, complaining that the company behind Snapchat has gobbled up once vibrant shopping and restaurant locations and converted them into boring office space. The firm projects that 6.4 percent of Snapchat’s users this year will be between 45 and 54, showing that it’s expanding its appeal among older users – even as fewer younger users join the network.
Gartner analyst Brian Blau sees Snap continuing that focus. “We collectively decided that this was going to be a … small investment”.
Chiu said the school’s administration will deliberate with its board of directors “to determine how the money can be leveraged to make the largest impact on our students and continue the tradition started here by the Brothers of Holy Cross over 60 years ago”.
Snap also runs some risk of getting the wind taken out of its sails by competitors. The company also acknowledges that competing products, like Instagram Stories, may impact its user growth and overall bottom line. That’s not the case with the Snap IPO. Demand for shares by institutional investors was said to be oversubscribed several times over.
You could argue Snap went public too early: It’s a secretive company ruled by CEO fiat.
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While the higher-than-expected pricing looks good for Snap, its troubles aren’t over. They say the average age of an investor buying Snap was 26, the same age as Spiegel.
