Snap tops expectations in pricing of IPO
- Author: Arturo Norris Mar 04, 2017,
Mar 04, 2017, 0:55
On Thursday, Snap Inc. priced its initial public offering at $17 per share, coming in above the expected range of $14 to $16 per share and valuing the company at $24 billion. The IPO book was oversubscribed by more than ten times, which indicates that today will be a hit for Snap.
In its second day of trading on the New York Stock Exchange, shares of Snap Inc. are up 10% as the markets opened Friday.
The parent company of social media phenomenon Snapchat has priced its shares at $17 each, valuing the firm at nearly $24bn and making it the biggest USA tech float since Chinese giant Alibaba in 2014.
In an earlier article on Tradingfloor we noted that for Spectacles to turn a profit, Snap will have to overcome obstacles that digital behemoth Google failed to with "Google Glass", which was backed by Google's considerable financial firepower and offered far greater functionality as a product.
Despite the challenges in converting "cool" into cash, Snap's valuation is the richest for a USA tech flotation since Facebook in 2012.
Mountain View-based Saint Francis High School could win big after Snap Inc.'s shares soar in IPO's first-day trading.
The company's losses widened previous year, and user growth is slowing down in the face of intense competition from larger rivals such as Facebook. However, the Los Angeles-based company incurred a $514.6 million loss for the year.
The broader market has also been buoyed in the months following the election of U.S. President Donald Trump, with the benchmark S&P 500 surging 10 percent since the November 8 election amid optimism around the Republican administration's domestic proposals, including plans to reform taxes paid by businesses.
Snap co-founders Evan Spiegel and Bobby Murphy rang the opening bell at the New York Stock Exchange, which Snap is listed on. The slowdown coincided with Facebook's Instagram launching a Snapchat copycat feature.
Investors may not hear from other analysts for awhile.
"The company planned to sell those shares to a group of existing investors, who got in before the IPO process began, people familiar with the deal said".
What's more, Snap shares carry no voting rights, so if investors don't like the management they can't vote them out.