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Venice's Snapchat To Go Public at $3.4 Billion Or $17 A Share

02 March, 2017, 11:13 | Author: Nadine Todd
  • Venice's Snapchat To Go Public at $3.4 Billion Or $17 A Share

About $3.4 billion worth of Snap shares will be sold, with existing investors taking home about $935 million from the sale and the company pocketing the rest.

They will list on Thursday on the New York Stock Exchange. What's more, the company is selling non-voting stock so any investor who puts in money will be placing their money on faith that the company's management will do things right. Meanwhile, Snap's chairman Michael Lynton planned to sell nearly 55,000 shares in the offering, bringing in more than $930,000. Snapchat is one of the hottest tech firms to go public since Facebook despite the fact that it isn't yet profitable. According to Yahoo Finance, the firm's market valuation is roughly $24 billion, "double the size of rival Twitter and the richest valuation in a USA tech IPO since Facebook in 2012".

Snap insiders and early investors hold shares with voting rights, giving them control of the company.

Snap had filed to go public in early February, luring investors with its advertising business that went from $59 million in revenue in 2015 to $400 million in 2016.

Snapchat still represents what every social media company wants - access to teenagers and millennials, who will make up the bulk of adults with purchasing power in the future. Twitter, on the other hand, enjoyed a massive first day with the company's stock gaining 73 percent by close.

Whereas Snapchat added 36 million daily active users in the first half of 2016, this slowed to 15 million in the second half of the year. Twitter, for example, is still trading below its IPO price, while Facebook dipped after the IPO but has steadily climbed since then.

Easing this feeling of pressure will be key for Snapchat, especially if it wants to attract older users.

In its public filings, and on its corporate website, Snap refers to itself as "a camera company".

Snapchat has often drawn comparisons to both Twitter, which also faces stagnant growth, and Facebook, whose users are highly engaged, just like Snapchat's.

" 'I don't really understand why he and his friends use the app so extensively, but I am trying to keep up, ' she said".

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