Snap Cofounders’ Fortunes Rise A Combined $2.8 Billion On IPO Day

The six-year-old startup, beloved by millennials, is the biggest US tech company to go public since Facebook, which was worth $104 billion at its 2012 IPO. Snap only started selling Spectacles at pop-up locations a few months ago, and made them available online just last week. Snap could also sell an additional 30 million shares to its underwriters at a discount on the $17 offering price.

Despite the challenges in converting “cool” into cash, Snap’s valuation is the richest for a USA tech flotation since Facebook in 2012.

Snap still has several questions it must tackle as it transitions to a public company.

CEO Evan Spiegel rung the opening bell of the New York Stock Exchange on Thursday, signaling the company’s public debut, a crowd of protesters gathered outside its Venice Beach, Calif., headquarters. In the case of Snap, the messaging and camera company stands to gain at least $3.4 billion in cash by listing 200 million shares at $17 each.

The California-based company raised $US3.4 billion in the float, with net proceeds of about $US2.3 billion.

At $24 a share, Snap is valued at almost $33 billion, including unvested stock options and grants, or about three times the market value of Twitter. 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.

The stock opened shortly before 11:20 a.m. on Thursday in NY, and started trading at $24 a share, rising 41.2% from its pricing at the open.

Founded in early 2011 by three friends who first met in a Stanford University dorm, Snapchat was valued at $4.25 million when it received its first venture capital.

Estimating the size of any such discount is a fraught exercise, given that past emerging-growth companies have ranged from Twitter Inc.to blank-check companies, which raise money from public markets for future acquisitions and which, according to the Securities and Exchange Commission, typically involve speculative investments.

Snap’s share price rose by nearly 50% in value at one stage yesterday and closed 44% higher at $24.48. But some investors worry that it may slowly disappoint over time like Twitter, with plateauing user growth and revenue.