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Snap's IPO was oversubscribed by more than ten-times, indicating
a hunger for the shares that might produce a pop on the first
day of trading.
The New York Stock Exchange carried out a trial run last week to
make sure the third-biggest ever technology IPO goes smoothly.
Facebook Inc's eagerly awaited market debut in 2012 was marred
by a technical glitch at rival exchange Nasdaq.
After pricing its IPO at $17 a share, the owner of the popular
disappearing-message app has a market value of roughly $24
billion, more than double the size of rival Twitter Inc and the
richest valuation in a U.S. tech IPO since Facebook five years
ago.
The share sale was the first test of investor appetite for a
social-media app that is beloved by teenagers and people under
30 for applying bunny faces and vomiting rainbows onto selfies,
but has yet to convert "cool" into cash.
Despite a nearly seven-fold increase in revenue, the Los
Angeles-based company's net loss widened 38 percent last year.
It faces intense competition from larger rivals such as
Facebook's Instagram as it grapples with decelerating user
growth.
Snap priced 200 million shares on Wednesday at $17 each, above
its expected range of $14 to $16 dollars a share.
The sale was well timed, as investors look for fresh
opportunities after 2016 marked the slowest year for IPOs since
2008. The launch could encourage debuts by other so-called
unicorns, tech startups with private valuations of $1 billion or
more.
Investors bought the shares despite them having no voting power,
an unprecedented feature for an IPO at odds with rising concerns
about corporate governance over the past few years from fund
managers looking to gain influence over executives.
Although Snap is going public at a much earlier stage in its
development than Twitter or Facebook, the five-year-old company
is valuing itself at nearly 60 times revenue, more than double
the 27 times revenue mark Facebook fetched in its IPO.
To justify its relatively high valuation and fend off concerns
about slowing user growth, Snap has emphasized how important
Snapchat is to its users, how long they spend on the app and the
revenue potential of the emerging trend for young people to
communicate with video rather than text.
Snap is set to begin trading on Thursday on the New York Stock
Exchange under the symbol SNAP.
(Reporting by Lauren Hirsch in New York; Editing by Bill Rigby)
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