Snapchat gets snapped up on Wall Street (The 3:59, Ep. 188)

Snap Inc., parent of the popular disappearing-message app Snapchat, has priced its initial public offering of 200 million non-voting shares at $17 each.

The shares are set to be sold in three different brackets and, according to Reuters, will be in the bracket of $14-$16 each.

Meanwhile, Twitter’s IPO in 2013 at $US26 per share yielded a $US14.2 billion market cap – but after an initial spike its stock has languished.

Snap declined to comment.

Silicon Valley has been buzzing about Snap’s IPO for months.

Snap’s share price rose by nearly 50% in value at one stage yesterday and closed 44% higher at $24.48.

The young company saw user growth slow to a halt in the final months of past year, according to its original IPO filing last month. The IPO book was oversubscribed by more than ten times, which indicates that today will be a hit for Snap. The underwriters want to make sure Snap gets as much money as it can while also allowing the bankers and institutional traders to make some profit. The company has been in dire need of cash after posting a net loss of $372.9 million in 2015 and $514.6 million the following year.

For every investor snapping up IPO shares, about ten times that number were ready to buy, according to Recode and other media reports.

The social networking site, which also owns Instagram and WhatsApp, went public in 2012, eliciting an overwhelming response from investors. “Everyone has heard of it”.

At $17, the company and its backers will pocket $3.4 billion in the offering that suggests the entire company is worth at least $23.6 billion. Those funds will give Snap greater ability to compete for talent and acquisitions against larger Internet companies like Facebook.

Interest in Snap’s shares could remain high amid media coverage and more investor demand, said Ihor Dusaniwsky, head of research at S3 Partners.

“A pertinent point in the company’s S1 filing for the IPO is that it doesn’t call itself a messaging service, but a camera company”.