Snap IPO is creating quite a buzz from the past few days. It is the largest IPO since Facebook IPO was launched some five years back. Also, since this is the first time a company will be issuing the non-voting shares, there was speculation in the market if the investors would be interested in it or not, given that they will have no say in the company management. But, all rumours and speculations will be put to rest when the IPO will be listed today on the New York Stock Exchange. The top executives of the company will be present for the bell-ringing ceremony.
The proposed price was quoted at $14 to $16 per share, which would have put the company’s market capitalisation at $19.7 billion. The company is, however, pricing its share at $17 each of which is a dollar above the marketed range, according to an insider. The same person, on the condition of anonymity, said that the market value of the company stands at $20 billion at this price based on 1.16 billion outstanding shares. If we consider 1.39 billion as the number of fully diluted shares, then market value stands at $23.6 billion.
The insiders also suggest that the IPO is subscribed many times. This makes Snap the most sought-after American technology company to go public after Facebook. Some of the investors have even agreed to keep the shares of the company for a minimum period of one year as was desired by Snap. The company wanted this to attain some price stability in the market.
The chief investment officer of Capital Innovations, which is an asset management firm, Michael Underhill said, “If Snap’s deal falters and shares sink below its IPO price that would leave a sour taste in IPO investors’ mouths and would cause hesitation among any management teams that are considering an IPO.”
A portfolio manager at Navy Capital, Sean Stiefel was of the opinion that this IPO is a sure buy. He said, “The most important thing to know about Snapchat is that we are moving to the world that emphasises pictures over words.Snapchat is proven to be a leader in this field that is in its infancy.”
Some portfolio managers were however not comfortable with the idea of non-voting shares and hence have decided not to get it in their portfolio as the founders Spiegel and Murphy will have full control even after the company goes public today.