Published: Sat, March 04, 2017
Technology | By Ramiro Moody

Snapchat Parent Stock Surges in Market Debut

Snapchat Parent Stock Surges in Market Debut

Snap's in-demand shares started trading in NY yesterday after the owner of the popular Snapchat messaging app raised US$3.4 billion (S$4.8 billion) in its initial public offering (IPO) on Wednesday, above its price expectations. It's also the biggest social-media listing since Twitter Inc., more than three years ago, and the daily compulsion of more than 150 million - mostly millennial - users.

The logo of messaging app Snapchat is seen at a booth at TechFair LA, a technology job fair, in Los Angeles, California, U.S., January 26, 2017.

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Stock was at $27.09 at 4pm, having closed at $24.48 a share Thursday - 44 per cent higher than their IPO pricing of $17 a share.

A price of $17-per-share puts a valuation of $23.8 billion on the 5-year-old company, based on the 1.16 billion Snap shares that remained after Wednesday's offering.

But in the hot stock market the day after President Trump's pro-growth speech to a joint session of Congress, Snap was able to raise another $200 million. It faces intense competition from larger rivals, such as Facebook Inc, as well as decelerating user growth. Last year, it reported sales of $405 million and a net loss of $515 million. In particular, Facebook's Instagram may emerge as a substitute for Snapchat. Dozens of other Snap investors could become overnight millionaires. Both sold 16 million shares, raking in $272 million. The structure will give the co-founders the right of 10 votes per share, while existing investors will have one vote per share and new investors will have no voting rights.

Snap admits that it doesn't foresee making a profit any time soon.

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