Snap (NYSE:SNAP) made its much-anticipated debut on the New York Stock Exchange on Thursday, trading at $24 a share, well above its $17 per share IPO price. Shares rose as much as $25.99 a little after 2pm EST. According to the Daily Mail, SNAP’s debut is, “the biggest tech IPO since Chinese retail site Alibaba started trading in 2014.”
Snap’s co-founders, Evan Spiegel and Robert Murphy, rang the opening bell.
Snap is, “an exciting growth story”, said IPOX Schuster CEO, Josef Schuster in an interview on BNN. He cited “phenomenal increase in revenue growth” is what excites investors despite the company’s reported $515 million net loss.
However, Stephen Isaacs, Alvine Capital Chairman of the Investment Committee, pointed out that Morgan Stanley and Goldman Sachs “should hang their heads in shame” because investors bought shares with no voting power — a first in the US.
— NYSE (@NYSE) March 1, 2017
Read on below for the top 10 things to know about the Snap IPO which originally appeared on the Investing News Network on February 28, 2017.
Snapchat’s parent company Snap, has finally filed its long awaited IPO. With the filing of the IPO, there has been a lot of new information which has come to the fore. This information relates to Snapchat’s users, valuation, revenue, expectations as well as the company’s structure.
There are a lot of expectations riding on the Snap’s IPO; however, will the company be able to beat its immediate competition from Instagram?
Here are 10 most important facts which everyone should know about Snap’s IPO, and what it will mean for the company’s app in the oncoming days.
- Raising funds: When it comes to overachieving its progression dreams, the company has not let any surprises stop its goals. With the advent of the IPO, the company is aiming at raising a whopping $3 billion, which would eventually push the company’s valuation to over $20 billion. There is no denying the fact that Snapchat’s enjoyed a meteoric success; nevertheless, since every company has its set of pitfalls, there are a lot of obstacles it will need to overcome if it wants to achieve its targets.
- Revenue growth: The increase in income from 2015 to 2016 was stupendous; it managed to raise the bar from $58.7 million to $404.5 million. The revenue hike was made possible due to the extensive advertising, which helped the social media giant to introduce new features on its platform.
- Losses: The grass is always greener on the other side. For this very reason, if the company was raking in huge profits, it was also incurring losses in 2016. Very few businesses can overcome their operating losses; Snapchat is unfortunately not one of them. It suffered $514.6 million in operating losses in 2016 itself. One of the primary reasons for this failure is that the company rents its servers, which bleeds into the profits heavily.
- Spectacles not a money maker: As per the filing report, Spectacles has not been able to rake in as much dough as the company had expected. At the time the feature was declared, people wondered if it was another marketing trick or just a new product launched to woo the users. However, at the end of the day, it turned out to be a marketing trick only, which did not fetch the desired results.
- Share prices: With such companies, speculating the stock prices can never be an easy task. With heavy losses overriding the profit history, the share prices are trending higher than any other company’s IPO in the past. For this very reason, it’s yet to see how the stock prices will pan out, giving way to a lot of troubled times.
- User engagement: As per the first prospectus, there are close to 2.5 billion Snaps which are registered from the app daily. This amounts to 158 million active users, who are using this app on a daily basis. Out of these 158 million, there are about 25 percent users who post their story every day. With such substantial engagement, Snapchat is one company to keep an eye out for.
- Following in Twitter’s footsteps: Facebook and Twitter are probably the biggest competitors of the social media company. Snap’s IPO is following closely in the footsteps of Twitter’s IPO. On the other hand, there is hardly any resemblance to Facebook’s IPO, wherein the company had already registered 483 million daily users, versus 158 million of Snapchat.
- Riding high on the waves of success: Unlike some of the other social media companies in the market currently, Snap’s IPO is happening relatively early. Facebook had been in the market for eight years before it filed for its IPO. However, Snap has filed for an IPO within five years of existence.
- Decision making: Despite opening up its doors to the public through its IPO, the decision making power will remain with the company’s co-founders only. Snap is selling Class A common stock, which will give no voting power to the share owners. CEO Evan Spiegel and co-founder Bobby Murphy will remain in charge of the management decisions, despite the IPO’s success/failure.
- Not a social media company: As per the founders, Snapchat is not a social media company, but a “camera company”. Even though there is a strong comparison between Facebook, Twitter and Snapchat, the company’s begs to differ when it comes to representing itself to the users as a wealth of opportunities and not any social media company, where people just share their statuses and daily activity details.
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Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in contributed article. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.