Companies Snap Should Snap Up With Its $28 Billion

SNAP, +48.00% the parent company of messaging app Snapchat, surged more than 40% on Thursday, but the Global X Social Media ETF SOCL, -1.30% fell 1.5%. Snap's pricing valued the company at $24 billion.

Some of the IPO demand can be chalked up to Snapchat being a well-known consumer brand - and one of the only billion-dollar tech startups going public.

They each landed a 17% stake worth $4bn (£3.26bn) based on the offer price in the share sale.

Snap said in its regulatory filing last month it took in $404 million in revenue a year ago but lost $515 million. While all of Snap's IPO shares were nonvoting Class A stock, Spiegel and Murphy also own millions of additional shares that allow them super-voting power and near-absolute control of the company. It's just a bummer that Snap seems like it's doomed, since it lost over half a billion dollars past year.

Lynton was an early investor in Snap, which is now worth more than $30 billion after investor excitement over the unprofitable company's future prospects.

That suggests the IPO shares could have sold for a higher price, although it might have created problems for the company if they did so - and then watched the publicly traded shares fall short.

Snap's secret weapon, according to the company and some analysts, is that its users are younger and incredibly engaged.

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The flotation values the business at $24bn, although Snap has never made a profit.

"With around 150 million daily users, Snapchat is more popular than Twitter", said Nicholas Hyett, equity analyst at Hargreaves Lansdown. The slowdown coincided with Facebook's Instagram launching a Snapchat copycat feature.

What time is the biggest initial public offering since Facebook (FB) or Alibaba (BABA) set to begin 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.

Some people familiar with the company's plans said in recent days that Snap's IPO could possibly come at $18 per share, which would have amounted to an additional $200 million.

That comes across in its prospectus, which makes clear Snap is a founder's company.


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