Snap Inc. said to price shares in IPO at $17 each

Caroline Beck
March 4, 2017

On Wednesday night, Snap set a price of $17 per share, valuing the company at $24 billion. In its initial public offering, Snap revealed user growth was up 48% year-over-year, slower than previous years. To make money, Snap will have to boost its revenue per user, but ad buyers tell DiClemente that the company's ad products are hard for small and midsize companies to use, and "Snap's targeting capabilities are not almost as sophisticated as those of Facebook".

Snap's IPO order book was more than 10 times oversubscribed and could have allowed the company to price its shares at as much as $19 a share. Twitter Inc. soared 73 percent on its opening day yet now trades at $15.67, 40 percent below its IPO price.

Despite the challenges in converting "cool" into cash, Snap's valuation is the richest for a USA tech flotation since Facebook in 2012.

Whether or not you believe in Evan Spiegel, Snap Inc's (NYSE: SNAP) highly anticipated IPO is seeing unprecedented demand from retail investors.

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Snapchat, Snap's main service, has a loyal user base of 158 million people who use it to send 2.5 billion messages every day, according to its initial public offering filing. Their remaining shares are worth an estimated $17 million. Father of two St. Francis students, his company led an investment round for Snapchat's two founders.

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.

Investors bought the shares despite them having no voting power, an unprecedented feature for an IPO at odds with rising concerns about corporate governance over the past few years from fund managers looking to gain influence over executives. The IPO served as great exposure to stocks and investments to a younger demographic, as the generation-defining company has finally hit the public market.

"While I've enjoyed Snap's journey with my partners as an early investor, I have the unexpected bonus of sharing the experience with my children", Eggers wrote in the blog post.

Other reports by TheDailyFarc

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