Snap (the parent company of Snapchat) has a rocky start to the IPO
Snap Inc., the parent company of Snapchat, started publicly trading on Thursday, 2nd March, with share prices debuting at a total of $24 each.
As CBC News explains, this followed Wednesday’s IPO pricing, which provided the first chance for early investors “to cash out on their investment”. However, Thursday’s debut on the NYSE (New York Stock Exchange) was the first available opportunity for retail investors.
For its debut, Snap Inc. offered an initial 200 million shares priced at $17 each, which was higher than the predicted range of $14 to $16.
Although debuting at $24 a share on Thursday, the company’s share price quickly increased to $24.60 in its first few minutes of trading. This continued to rise throughout the day, with shares reaching a high of $25.42 at one point. This total, however, closed at $24.48 per share.
In Snap’s second day of trading, it closed at $27.09. This was 54.4% higher than the shares’ IPO (Initial Public Offering), LA Times reports.
As Tech Market Review points out, Snap’s shares rose by 44% on their first day of trading, which takes the total higher than the first day ‘pop’ in Facebook’s shares when it first debuted on the stock market. However, Snap. was unable to compete with Twitter’s 70% ‘pop’ when it debuted its IPO in 2013.
The shares have since dropped below $21 and seem to have leveled off.
The TJM take: Snap may be set to be the next Twitter… a great product with plenty of users, but no way of making ‘real’ money.
Although it’s clearly generating a revenue from ads it needs to increase this substantially to be worthy of such great valuations. Despite Snapchat still having its ‘intriguing’ factor (for example, filters and the Face Swap feature), it’s used mainly for ‘fun’, and this could slow its growth even further. With its big competitor, Instagram, also doing a lot of the same things (by adding a ‘Stories’ feature, for example), and growing in active users and downloads where Snapchat is not, is it too late for Snap take back its crown?
What will be interesting is what happens to the users based once the 'Snap-Gen' grows up. Will they remain loyal? Will the platform change? Will the new generation like Snap? These are all big questions that us users and investors want answers to!
*Image source: LA Times
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