VANISHING ACT
Investors ‘Snap’ up IPO; surges 44% on 1st
Snap, crackle, pop! Shares of Snap surged 44 percent in their first day on the New York Stock Exchange, as Wall Street investors scrambled to grab a piece of the red-hot startup that owns the Snapchat disappearing-message app.
Snap’s stock, trading under the ticker SNAP, closed at $24.48 in the regular session, valuing the company at $34 billion — more than three times the market capitalization of Twitter.
“This IPO shows a huge vote of confidence in the continued innovation coming out of Silicon Valley,” said Mark Yusko, chief executive of Morgan Creek Capital Management, which owned preIPO shares of Snap and also participated in the IPO. “There’s immense optimism in the market right now, how long that lasts is hard to measure.”
Snapchat first grabbed the public’s attention in 2011 by enabling sexting teenagers with disappearing texts and pictures, limiting the chance that nude pics could travel around the internet.
In six years, the app’s reputation has improved as it has created a news platform to attract big-name publishers and advertisers. Twitter, meanwhile, has struggled to combat abuse on its network, while Facebook’s scant regard for privacy has helped steer teens in droves to Snapchat.
Snap is the latest startup to mint millennial billionaires, making co-founders Evan Spiegel, 26, and Bobby Murphy, 28, worth about $5.4 billion each. That’s paltry compared to Mark Zuckerberg, whose worth rose to $19.3 billion when Facebook IPO’d, but it far outpaces what other major tech tycoons bagged whenthey took their startups to Wall Street.
In 1986, the Microsoft IPO made a little-known Silicon Valley nerd named Bill Gates worth $350 million.
In 1997, Jeff Bezos’ net worth rose to about $227 million when Amazon debuted. He and his family owned about 52 percent of the company, which was then only about 3 years old.
Gates and Bezos are now worth $85.6 billion and $73.4 billion, respectively.
Snap is easily the biggest tech IPO since Alibaba debuted in 2014, although it is still dwarfed by the Chinese e-commerce giant’s initial market value of $231 billion.
Demand reportedly outstripped the supply of 300 million shares by tenfold. Investors had priced the shares at $17 late on Wednesday, above the initial $14 to $16 Snap had been seeking.
The company started in 2011 and has been one of the fastest-growing social networks ever with more than 150 million daily active users, according to regulatory filings.
Last year, Snap rebranded itself as a camera company, introducing sunglasses that connect with the app and show friends what the user is seeing.
Snap admits that it doesn’t foresee making a profit any time soon. But some tech mavens predict the app will embed itself in every part of users’ lives through the “internet of things.”
“Snap will be one of the first to viably connect your coffee maker at home or juicer at home, those kinds of applications,” said Jonathan Hill, dean of Pace University’s Seidenberg School of Computer Science.