Today is one of those days that the mainstream will look back on and analyse to death. Today was the day that ‘the biggest IPO of 2017’ hit the market. Snap Inc., the parent company of Snapchat, debuted to much fanfare on the New York Stock Exchange on Thursday, closing at $24.48 a share – 44 percent higher than their IPO pricing of $17 a share. That’s above the expected range of $14 to $16. Snap is expected to start trading on the New York Stock Exchange on Thursday under the symbol “SNAP.”
That means Snapchat is now worth an estimated $33billion – making the messaging app worth three times as much as social network rival Twitter.
Snapchat’s IPO marked the biggest tech debut on the market since 2014, when Chinese online retailer Alibaba started trading.The company’s 26-year-old CEO Evan Spiegel and his co-founder Bobby Murphy, 28, rang the opening bell at the NYSE Thursday morning.
Betting on the future of Snap Inc.?
Founded in 2011, it has grown to become one of the western world’s most used social media apps. Their daily active users are around 158 million people. They have around 301 million monthly active users.
They made $404.5 million in revenue in 2016. This was up from $58.7 million in 2015. Incredible growth. However…
In 2015 the company made a loss of US$372.9 million. And in 2016 that loss widened to $514.6 million.
Let’s repeat that again. Last year, this six-year-old company on $404.5 million in revenue lost more than half a billion US dollars.
Possible reason for Snap Inc.’s stellar IPO debut?
Snapchat CEO Evan Spiegel is widely hailed as a product visionary in Silicon Valley.
Former Twitter CEO Dick Costolo privately raved about Speigel in emails that were later leaked, saying, “I really think he is one of the best product thinkers out there right now.”
Mark Zuckerberg paid Spiegel an even bigger compliment — he tried to buy Snapchat for $3 billion, and when he was rejected he decided to clone just about every aspect of Snapchat he could clone.
Troubled times ahead for Snap Inc. and the IPO?
While the higher-than-expected pricing looks good for Snap, its troubles aren’t over.
“What that number means for the longer term — very little,” said Chi-Hua Chien, managing partner at Goodwater Capital who originated the VC firm Accel Partners’ investment in Facebook and later invested in Twitter while at another firm.
Twitter, for example, shot up nearly 73 percent on its first trading day and now trades well below its IPO price. Facebook, meanwhile, saw its stock decline sharply for a few months after going public. Now, it’s trading more than three times its IPO price, near a record high.
At the end of the day, Spiegel is now worth more than $5.4billion, thanks to the more than 210 million shares she held onto and the 16 million he sold.