Let’s have a class Chat about Snap IPO

LAST

week the highly touted social media starlet Snap went public. The company that made its name with the Snapchat app for making photos vanish is doing the same thing to shareholder rights: Pooof!

The stock, which priced Wednesday night at $17, traded up to $26 on Thursday, its opening day, before closing at $24.48.

That’s a strong showing, but many investors who may be happy with the stock’s return may not realize that the shares on the initial public offering come with zero voting rights.

Yes, Snap — which raised $3.4 billion with its sale of 200 million shares valuing the company at $24 billion — made the shares offered in the IPO, Class A nonvoting shares.

If your broker was lucky enough to get you in on the offering, congrats: You made some money in a Snap. However, one thing not being discussed in all the glowing media reports is how the La-La Landbased company has flouted shareholder rights in favor of what is becoming more common now: Silicon Valley CEO totalitarianism.

For sure, Evan Spiegel, the handsome 26-year-old multibillionaire who in June got engaged to Victoria’s Secret supermodel Miranda Kerr, is a social media superstar, and Snap is a good company. Or at least it is for right now, and it probably will be for the foreseeable future.

But the Class C voting shares are reserved for only co-founders Chief Executive Spiegel and Chief Technology Officer Bobby Murphy.

Their shares have 10 votes apiece. Sure, Facebook’s Mark Zuckerberg maintains majority control of his company through supercharged Class B shares with 10 times voting power. And yes, so do Google’s (aka Alphabet’s) Larry Page and Sergey Brin. So young Evan is indeed in good company.

But here’s the question: What lies in store for the future?

What happens when these guys — and they are all guys — turn 50?

What if they go through, say, a Page Six-worthy, scintillating, midlife crisis?

What if they pull a John McAfee and decide to go live as a recluse in Belize?

Or what if after 20 years they decide they have conquered social media and decide they really don’t want to work in the interests of shareholders anymore but would really rather slurp piña coladas and phone it in?

Hopefully this doesn’t happen with this crop of tech titans, but if it does, you as a shareholder have little recourse to change management or pressure the board to do something, since you hold nonvoting shares.

So while Snap is a great company, remember this when you hear some Silicon Valley chief championing individual rights: They don’t follow what they preach when it comes down to ownership in their companies.