Snapchat’s $24 Billion Valuation Sets A High Bar For Its Future

Snap Inc. shares are reportedly expected to start trading around 11am EST on Thursday morning. The $17 initial offering price valued the company at about $24 billion, a number that has since risen with the Venice, CA, company’s share price shooting above $25, as of this writing. San Francisco-based software startup AppDynamics had been poised to take that title with a $156 million IPO in January, but instead sold to Cisco for $3.7 billion two days before the IPO was set to price.

Despite the challenges in converting “cool” into cash, Snap is targeting a valuation of between $19.5 billion and $22.3 billion from listing on the New York Stock Exchange on Thursday, the richest valuation in a US tech IPO since Facebook in 2012.

Meanwhile, signs of strong demand for Snap stock among investors are already there.

But some experts see that stiff competition, as well as the fact that the company lost $514 million previous year, as potential challenges for maintaining the high stock price. In 2015, it reported losses of $372.9 million; a year later it documented a loss of $514.6 million. “It certainly pushes the limits on governance”. The app added 36 million daily active users in the first half of past year – but just 15 million in the second half, says Sky.

Dozens of other Snap investors could become overnight millionaires. Among other social media companies debut time on the NYSE, Twitter (TWTR) began trading at 10:49 a.m. ET and Facebook began trading at 11:30 a.m. ET, recalls IPOboutique, “but only after severe glitches on the exchange”. Fifty-one percent said they use Facebook several times a day, and 26 percent said the same about Messenger.

“Snap Inc.is becoming a public company just as its user growth and monetization growth rates are beginning to meaningfully slow”, analyst Anthony DiClemente wrote in a note to clients Thursday.

The fun part of going public is now over for Snap.

But Snap’s core business is still its messaging app, which has a much smaller audience than rival Facebook.

Snapchat averaged 158 million daily active users for the fourth quarter of 2016, an increase of 48 per cent year over year but up only three per cent sequentially from 153 million in the third quarter.

The company was founded on September 16, 2011, by Evan Spiegel and Bobby Murphy.

Does Snapchat need to go beyond young users to succeed?