Snap Prices Shares at $17 for Thursday's IPO
- Author: Zachary Reyes Mar 03, 2017,
Mar 03, 2017, 5:30
While Snap cautioned it had no binding commitments yet from investors accepting such a lock-up period, the disclosure is a sign of confidence from the company in what is expected to be the biggest U.S. IPO since Facebook Inc (FB.O).
In fact, appetite for Snap stock was so strong, many investors accidentally poured money into a completely unrelated company, Snap Interactive, as economist Justin Wolfers pointed out on Twitter.
Just a matter of days after its Spectacles went on sale, people briefed on Snap's upcoming products stated that a drone is one direction that the company is considering going in.
Evan Spiegel is already a very rich man.
At $24 billion, the IPO valuation was more than double the size of rival Twitter and the richest valuation in a USA technology IPO since Facebook in 2012.
The Los Angeles-based company, Snap has enjoyed strong revenue growth in recent years, with earnings climbing almost seven-fold in 2016 to $404.5 million.
Reuters reported that the company could have priced its shares as high as $19, but chose to set a lower price to attract longer-term mutual fund investors instead of hedge funds looking to turn a quick profit. However, they started things last night, coming in at $17 per share, which was pretty respectable and helped them raise about $3.4 billion.
Bernadette Tansey is Xconomy's San Francisco Editor.
Snap Inc.'s debut on the NYSE this morning looks like a big hit, and has been described as "the biggest tech listing in years".
The social media app now faces the huge task of squeezing profits from its users, which are reportedly at nearly 160million daily. Investors had priced the shares at $17 late on Wednesday, above the initial $14 to $16 Snap had been seeking.
Past year 11 Bay Area companies went public, raising $1.2 billion. Sources quoted by United States network CNBC said they got as little as 2% of the number of shares they were looking to purchase.
It is now 39% down on its offer price - its user growth and other metrics consistently proving disappointing for investors.