In its public filings, and on its corporate website, Snap refers to itself as “a camera company”. And it expects anyone buying up to a quarter of its shares to agree not to sell them for a year.
Applying lock-ups helps companies moderate stock volatility.
Snap has had to convince potential investors that it won’t have the same trajectory as Twitter has, a company that has been struggling constantly ever since its IPO, despite massive optimism shown both by the company and investors. Analysts had expected a price of $14 to $16 per share. The stock is now indicated to open at between $21 and $23 a share, according to price indications at 10:05 a.m. E.T.
That’s far, far, and away above the price Snap set last night, $17 per share, when the company raised $3.4 billion – a 44 percent increase.
Because SNAP shares gained so much value, the company is already worth – on paper – more than household names like CBS and American Airlines.
Ultimately, Snap’s competition, which includes wide-moat Facebook with billions of users, is overwhelming in our view.
Moreover, 26-year-old Spiegel will continue to hold a stake of about 17 percent in the company, valued at $4.05 billion. He points out that Snapchat’s popularity with millennials is appealing to advertisers and investors and is not a quality universally replicated within tech.
Snap will release 200 million shares on Thursday, none of which have voting power.
The Los Angeles-based company, Snap has enjoyed strong revenue growth in recent years, with earnings climbing almost seven-fold in 2016 to $404.5 million.
The footage recorded by the Snap Spectacles could then be uploaded to the Snapchat app.
Snap’s IPO also is the first notable tech IPO of 2017.
“The demand for the Snap IPO has been very, very strong”, says Jeff Zell, an analyst with IPO Boutique, a research firm.
Loss-making Snap’s Snapchat app – best known for disappearing messages and use of image filters to add special effects – has proved popular with teenagers especially, with over 158 million users worldwide but user growth has been slowing.