Snap valuation jumps to over Dollars 20 bln after IPO

Snap is targeting a valuation of between $19.5 billion and $22.3 billion from listing on the New York Stock Exchange on Thursday.

Snap, Inc. – the company behind Snapchat – started trading Thursday morning in its initial public offering at the New York Stock Exchange.

Twitter was listed in 2013 at a hefty 93 percent premium to the issue price of $26 but has fallen since then and closed at $15.79.

The first-day jump may not be an indication of what happens to their fortunes from here. One of the ironies of tomorrow’s IPO is that while its most active users are younger than 25, numerous professional investors who will be deciding whether to buy shares for their clients have never used the app and hardly understand it.

At the beginning of February Snap’s formal announcement to regulators of its plans revealed that the company had revenue of $404m a year ago, but made a loss of $515m.

Snap’s IPO valuation of $23.8 billion and 2016 revenue of $404.5 million gives a ratio of 58.8.

In its IPO filing, Snap, the creators of Snapchat, defined itself as a “camera company” and after the release of its Spectacles, the company is now reportedly taking aim at drones. James Gellert, chief executive of the analysis firm Rapid Ratings, expects Snap will crackle with a post-IPO pop, thanks to tech-focused investors hungry to get their hands on something new.

But Snap continues to struggle to make money – and it signaled a profit may not be coming soon.

It can take some time for investors in stocks trading on their first day to find a price, particularly in a case such as Snap in which there is high investor interest.

Some of the IPO demand can be chalked up to Snapchat being a well-known consumer brand – and one of the only billion-dollar tech startups going public. In Twitter and Facebook, he said, Snap has two “divergent role models, if they are students of the market”. While all of Snap’s IPO shares were nonvoting Class A stock, Spiegel and Murphy also own millions of additional shares that allow them super-voting power and near-absolute control of the company. For weeks, the target range for its debut price was between $14 and $16 – which would have translated to about $3 billion for 200 million shares.