Snapchat company's share price soars on debut

Justin Greene
March 4, 2017

The share price, above the $14-$16 range the company had communicated in filings with the US Securities and Exchange Commission, suggests that Snap's recent investor road show generated significant enthusiasm about its business prospects.

Snapchat's parent company, Snap, to kick off on the stock market at a $24 billion valuation, the biggest tech listing in years.

"The deceleration in user growth is a clear indicator that Snap is losing its snap", said Lee Bressler, a portfolio manager at Carbon Investment Partners, a small hedge fund, ahead of the IPO pricing.

The firm's inital public offering (IPO) is the biggest for a USA tech firm since Facebook in 2012 and will turn the company's founders, Evan Spiegel and Bobby Murphy, into multi-billionaires. Both leaks come during the week Snap Inc. officially went public on the New York Stock Exchange, trading up at 48.4 percent, according to Reuters. But by the end of the day today, he'll be a an even richer man.

That implies a multiple of about 21.4 times EMarketer's estimate for Snap's 2017 advertising sales.

It will turn the company's founders Evan Spiegel and Bobby Murphy into multi-billionaires.

Snap raised $3.4 billion in Wednesday's initial public offering when it sold 200 million shares for $17 each. IBD focuses on the best-performing IPOs of the past three years in its IPO Leaders column.

DiClemente points out that Snapchat is already seeing a slowdown in the growth of daily average users and average revenue per user, two crucial metrics for a social media company.

Early indications pointed to Snap shares opening up at between US$22 and US$24. And it expects anyone buying up to a quarter of its shares to agree not to sell them for a year.

Michael Hewson, chief market analyst at CMC Markets UK, said: "Looking at the numbers any prospective investors will be taking an enormous leap of faith on a company which is haemorrhaging cash".

"It's got a bigger market cap than a lot of major companies that deliver far higher, sustained profits than Snap has ever managed", he says, adding also that it is still a loss-making enterprise.

Other reports by Ligue1talk

Discuss This Article