Snap Inc., the parent company of mobile-messaging service Snapchat, has priced its initial public offering of 200 million shares at $17 per share, which is a higher price than it had originally predicted.
They first announced the pricing in a press release yesterday evening:
“Snap Inc. today announced the pricing of its initial public offering of 200,000,000 shares of Class A common stock at a price to the public of $17 per share, for a total offering size of $3,400,000,000. Snap is issuing and selling 145,000,000 shares of Class A common stock and the selling stockholders are selling an additional 55,000,000 shares of Class A common stock. The shares are expected to begin trading on the New York Stock Exchange on March 2, 2017 under the symbol SNAP.”
At 200 million shares, the company will be valued at nearly $24 billion. According to CNBC, the IPO is 12 times oversubscribed, which means there were 12 times more orders for than there were shares offered. The high price is further indication that the company is seeing greater demand than expected for its initial public offering.
Snap says its Snapchat app has a loyal user base of just over 150 million people, with 2.5 billion messages sent on a daily basis. In addition, Goldman Sachs has forecast Snap to increase its revenue fivefold by 2018. However, user growth did slow towards the end of the third quarter of 2016 and there are those that remain skeptical about how the company plans to turn its popularity into profit.
Snap’s focus seems to be on monetizing its users through advertising. It has directed significant time and investment into working with media partners - including The Washington Post, Buzzfeed, Mashable and Sky Sports - to deliver news and entertainment in the ‘Discover’ tab.
It has received criticism for some of the decisions made in its SEC filing. For example, it defined itself as a camera company rather than a social media company. It also revealed the IPO shares will give investors no voting rights, which leaves Snap’s founders and previous investors with complete control of the company.
Despite these reservations, Snap is also one of the few new growth opportunities to hit the public market. It’s hoped the success of Snap’s IPO could breathe new life into a dormant IPO market.
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(Image Credit - AdamPrzezdziek)