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Snap stock to make debut after better-than-expected IPO

Snap stock to make debut after better-than-expected IPO Snap Inc., the maker of the disappearing photo app dependent upon the fickle favor of the millennial demographic, is going public at a valuation at least twice as expensive as Facebook Inc., and four times more costly than Twitter Inc., Bloomberg reported on Thursday.

Snap sold 200 million shares in its initial public offering at $17 each, according to a statement Wednesday. At that price, it has a market value of about $20 billion, based on 1.16 billion shares outstanding after the IPO. That implies a multiple of about 21.4 times EMarketer’s estimate for Snap’s 2017 advertising sales.

Snap raised $3.4 billion in its IPO, pricing shares above the marketed range, in the biggest social-media IPO since Twitter more than three years ago. It’s also the first tech company to list in the U.S. this year.

Snap, which posted a net loss last year of $515 million, even as revenue climbed almost sevenfold, has some things to prove. It needs to continue to increase revenue per user, address slower user growth - which fell below 50 percent in the fourth quarter for the first time since at least 2014 - and inch closer to profitability.

The Los Angeles-based company offered the shares in its IPO for $14 to $16 each. Orders for the offering were concentrated at about $17 to $18 a share, people familiar with the process said Tuesday. Demand outpaced the number of shares being offered by a multiple of 10, people familiar with the situation said.

Including unexercised stock options and other convertibles for a total of 1.39 billion fully diluted shares, Snap would have a fully diluted value of about $23.6 billion, according to a person with knowledge of the matter.

Given the interest, Snap could have priced the shares at $19 each, the person said, but executives wanted to ensure that shares would make a decent gain in their debut.

The stock will start trading Thursday, listed on the New York Stock Exchange under the symbol SNAP. The debut may benefit from good timing: U.S. equities advanced Wednesday, setting records on the heaviest trading volume so far this year.

Morgan Stanley and Goldman Sachs Group Inc. led the offering. Goldman Sachs will be the stabilization agent, ensuring the first day of trading goes smoothly.
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