Snap Inc Prices IPO At $17

Parent company behind popular messaging application Snapchat beats initial expectations for IPO from $14 to $17

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From the first two filings for the initial public offering of its shares, Snap Inc originally set its valuation at $25 billion and lowering it a week later to $22 billion. A few hours before the launch of its IPO, the company reportedly priced its IPO at $17 per share from originally $14 to $16 per share now raising its valuation at around $24 billion.

Although a lot of investors and analysts were skeptical with the company’s IPO launch at such an early stage into Snap Inc’s development just ripe at its fifth year and the amount of losses it incurred last year, Snap surpassed Wall Street test on Wednesday’s market close as it priced 200 million shares for initial public offering at $17 each beating what most originally expected at around $14 to $16.

The company which would start trading on Thursday under the ticker SNAP on the New York Stock Exchange is the biggest technology IPO since Alibaba’s launch in 2014 and Twitter’s debut back in 2013. One of the top tech stocks to date, Facebook, launched back in 2012 and is currently valued at around $395 billion while Twitter is valued at $11 billion.

Snapchat’s Transition To Hardware

Following the release of Facebook-owned Instagram version of stories and live videos which was launched shortly on Facebook’s messenger app months later, Snapchat’s investors then turned to CEO and founder Evan Spiegel to whether how the company would survive the competition and the decreasing number of Snapchat’s daily users.

On top of the pressing issues regarding the application’s profitability, the company also reported huge losses last year amounting to more than $500 million, $200 million more than the previous years at around $372 million.

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Spiegel then decided to focus on developing camera hardware instead, starting with the limited release of Spectacles last year which are glasses which can be used to record 10-second clips and has the capacity to upload directly to the user’s personal Snapchat account. Although it has been received positively, it has been only released in a small number of cities at $130 each.

Just recently, a hint of the company working on a drone device was announced in a video for the company’s investors last month where Spiegel talked about how camera technology has the power to change the way people communicate with each other.

SNAP IPO Status

On Snap Inc’s initial public offering of its shares, the company was able to raise more than $2 billion for the company alone and almost $1 billion for Snap Inc.’s investors and founders.

Upon Wednesday’s market close, Snap announced that is to sell more than 200 million shares for $17, 55 million of which would be sold by the company’s first investors and is set to cash in more than $900 million in proceeds.

Following the announcement on Wednesday evening, Snap’s IPO is now the biggest US-listed initial public offering since the launch of Alibaba Group Holdings back in 2014.

Although the company is set to report more losses due to their continuous investment in branding the company more of a hardware company rather than fully focusing on the application which made the company famous, investors are currently focusing on how most of the application’s users are comprised of millennials and open the application roughly 18 times a day which will be good for the company’s advertising revenue and other related ventures.

The outlook for Snap is currently positive with investors expecting the company to earn as much as Facebook did should the company keep up with its current number of users and should go on successful with its hardware and camera venture.

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