Is Snapchat developing a DRONE?
- Author: Carolyn Briggs Mar 03, 2017,
Mar 03, 2017, 3:16
Snap cofounders Evan Spiegel and Bobby Murphy added a combined $2.8 billion to their fortunes on Thursday - and became the only self-made billionaires in the world under the age of 30 to own a publicly traded company.
Shares of the parent company of photo-sharing app, Snapchat, jumped 41% to almost $24, when the initial public offering opened trading on Thursday morning, giving Snap Inc. a valuation billions above even its highest previous estimates.
This makes Snapchat's market debut the biggest technology IPO since Alibaba (BABA - Free Report) went public back in 2014.
Snap calls itself a "camera company" and last month began selling $130 video-enabled sunglasses nationwide.
Snap has had to convince potential investors that it won't have the same trajectory as Twitter has, a company that has been struggling constantly ever since its IPO, despite massive optimism shown both by the company and investors. On Wednesday night, Snap set a price of $17 per share, valuing the company at $24 billion. Meanwhile, Twitter's IPO in 2013 at $26 per share yielded a $14.2 billion market cap - but after an initial spike its stock has languished well below early highs. The IPO was oversubscribed by more than ten-times which means the shares could have been priced at as much as $19. The China-based e-commerce company now holds the status as the world's biggest IPO at $25 billion, though it initially only raised $21.8 billion. While a robust opening is always preferred, it's not always a long-term indicator of success: Facebook's initial offering was rocky, with shares basically staying flat in the first day of trading. It's also the first to go public among a class of companies, including Uber, Airbnb and Pinterest, that have been valued at more than $10 billion while still privately held.
The surge on Wall Street has been seen as proof, at least for a day, that there is investor demand for young - but still unproven - tech companies.