The much-awaited IPO of the year made its debut on the New York stock exchange (NYSE) in an explosive manner. Issued at the price of $17, it opened on the NYSE 41.2% up at $24 at 11.19 AM. It was the most actively traded stock on the exchange today with nearly 215 million shares changing hands. In intraday, it hit a high of 53.2 percent which is $26.05 before closing at 44 percent higher at $24.48. The first performance of Snap was much better than that of Google, Facebook or Alibaba.
Despite the litany of red flags, the IPO was subscribed by over 10 times and all speculations were laid to rest today. The losses that will persist for few more years, a slowdown in the user growth rates, the issuance of non-voting shares etc. did not deter the investors from applying for this IPO. It is the first time any company has gone public but will keep functioning as the private entity with founders Evan Spiegel and Bobby Murphy having full control over the functioning of the company.
Some fund houses stayed away from this IPO as they had their reservations and were not comfortable with the issuance of non-voting shares. One such analyst from Pivotal Research Group, Brian Wieser is of the opinion that the offering price of $17 was exorbitant and it should be nothing more than $10. He feels that Snap has tough competition ahead from larger companies and has to overcome the challenge of slow growth in user base.
Those who believe in the story of Snap argue that the company has potential to become like its biggest rival Facebook one day. On Thursday the total worth of Snap was $34 billion while Facebook has the net worth of $395 billion. These supporters are making this claim based on the data that shows that at the end of 2016, there were 158 million daily users. The sales were of $404 million and this is remarkable if you consider that there was nothing three years back.
For now, the IPO seems to have delivered what was expected of it. Snap was able to raise $3.4 billion through it which was the biggest IPO since Facebook’s which was nearly five years back. On its debut at NYSE, it popped 44% which was again the biggest for any billion-dollar I.P.O in the last three years since Twitter. The Twitter stock has surged by 72.84 percent on the first day close on Nov. 7, 2013.