Published: Sat, March 04, 2017
Electronics | By Lorenzo Hawkins

Successful Snapchat IPO may inspire Bay Area tech companies to go public

Successful Snapchat IPO may inspire Bay Area tech companies to go public

Snap's first day as a publicly traded stock - ticker SNAP - has exceeded expectations: Thursday afternoon, shares in the Snapchat creator closed at $24.48, almost 50% higher than its initial Wednesday night share price of $17. Snap, by the way, lost more than half a billion previous year. Their remaining stakes, of about 210 million shares, are worth about $5.2 billion each based on the stock's first-day closing price.

Shares started trading at $23.70, up from their IPO price of $17.

At the beginning of February Snap's formal announcement to regulators of its plans revealed that the company had revenue of $404m previous year, but made a loss of $515m. Snap's pricing valued the company at $24 billion. The larger ecosystems of Snap's competitors may have also created somewhat of an exit barrier for their users, which we think could further limit the growth acceleration of Snapchat users.

Snap disclosed last month that it expected investors buying up to a quarter of its shares in the company's $3.4 billion (€3.2 billion) initial public offering to agree not to sell them for a year.

Spiegel, 26, made $2.4 million as CEO in 2016, but has said he will reduce his annual salary to $1 now that he's a billionaire.

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Snap has had to convince potential investors that it won't have the same trajectory as Twitter has, a company that has been struggling constantly ever since its IPO, despite massive optimism shown both by the company and investors.

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. "If they don't like how things are going, they can sell their stock".

Yet among the attractive figures for investors are Snap's average of 158 million active daily users.

It's looking like Sacca really missed out on this opportunity, but he's done well with other risks, like investing in Twitter, Uber and Instagram early on. Like Facebook, though, there is enough hype for Snap, and near religious reverence for Spiegel, to maintain demand for its IPO, despite the block on shareholder voting.

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