Snap Inc. -the parent of social network Snapchat – debuted on the New York Stock Exchange on Thursday in the most anticipated tech IPO in years. The offering was heavily over-subscribed, with some fund managers getting as little as 2% of their requests filled. That gave the company a $23.8 billion valuation, even though Snap has never turned a profit and even stated in its IPO filing that it might never be profitable.
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It also makes Snap the biggest share listing in the tech sector since Chinese e-commerce group Alibaba in 2014. The school’s initial $15,000 investment is now worth $24 million after the $17 per share opening price.
Some analysts are expressing pessimism about the immediate future of the stock, pointing out that Snap’s fundamentals are closer to Twitter than Facebook.
Benchmark Capital, Lightspeed Venture Partners, and General Catalyst are among the investors that planned to sell shares.
The social-media industry is having one of its most eventful and exciting days in a while, with the Thursday trading debut of Snap Inc. After the father saw how much his kids used the app, he led his company to invest in the app. That was above the expected range of $14 to $16. That has investors wondering whether the company will end up more like Twitter, with its troubles attracting users and declining stock price, or Facebook, with soaring user numbers and stock price. None of the Class A shares sold in the IPO today had voting rights, ensuring that Spiegel and Murphy will retain control of the company.
At the beginning of February Snap’s formal announcement to regulators of its plans revealed that the company made sales of $404m previous year, but a loss of $515m.
Analyst Brian Wieser from Pivotal Research said it was a “promising early stage company with significant opportunity ahead of itself” but was “significantly overvalued given the likely scale of its long-term opportunity and the risks associated with executing against that opportunity”.
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The Comcast division has been in bed with Snap for a while, most notably pushing Rio Olympics coverage to the site in partnership with BuzzFeed, generating over two billion views.
