Successful Snapchat IPO may inspire Bay Area tech companies to go public

All’s forgiven now: Facebook shares now go for about $137.

Although Snap went public at a much earlier stage in its development than its two rivals Twitter or Facebook, the 5-year-old company is valuing itself at almost 60 times revenue and more than double the 27 times revenue Facebook fetched when it went public in 2012.

Outgoing Sony Entertainment chief Michael Lynton is chairman of the Snap board.

For an IPO launch – the first day that shares are available for public trading – investors buy up a certain amount of stock as soon as it is made available.

Twitter, with more than 300 million monthly active users, comes in at 4.8 times projected revenue. Co-founders Evan Spiegel and Robert Murphy will retain controlling power over all matters at Snap; the Class A stock being sold in the IPO has no voting power. Unlike most executives on listing day, they didn’t hang around on the floor for the opening trade price to be set.

Benchmark Capital, Lightspeed Venture Partners, and General Catalyst are among the investors that planned to sell shares.

Snap, which posted a net loss a year ago of $515 million, even as revenue climbed nearly sevenfold, has some things to prove.

26-year old Mr Spiegel is no stranger to the limelight. Snapchat has always drawn younger users, and a Venice Beach office plays into that. Many users enjoy transforming images with what Snapchat calls its “lenses”. And the SF Growth Fund – the private school’s student-run endowment fund that helps pay for scholarships and subsidize tuition – also got in one of Snap’s early investments rounds for an undisclosed amount of money, according to the Silicon Valley Business Journal.

Snap says 158 million people use its Snapchat app daily, but its growth rate has been declining with the advent of competition from Facebook’s Instagram.

It reported a rise of just over 3% in the final quarter of past year when it had been in double figures earlier in 2017.

Channel checks with underwriters currently reveals that the deal is “multiple times oversubscribed”, with price guidance now likely to be $1-$2 above the $14-to-$16 estimated price range for shares, said IPOboutique in an email to clients.