Snap’s IPO was much more expensive than those of other tech companies

The Initial Public Offering (IPO) will be priced after the USA stock market closes on March 1 and will see the company, which has yet to make a profit, be valued in the region of $20-25 billion (£16-20bn).

Previous year 11 Bay Area companies went public, raising $1.2 billion.

It is now 39% down on its offer price – its user growth and other metrics consistently proving disappointing for investors. The closing price of Snap Inc. – which owns mobile app Snapchat – catapulted its valuation to $28.4 billion, much higher than rival Twitter’s $11.5 billion and CBS Corp’s $27.6 billion and American Airlines’s $23.7 billion.

26-year old Mr Spiegel is no stranger to the limelight.

But some analysts still caution that Snap has to prove itself. The China-based e-commerce company now holds the status as the world’s biggest IPO at $25 billion, though it initially only raised $21.8 billion. The IPO reportedly is oversubscribed, showing strong investor interest.

“Snap presents investors with the opportunity to invest in the company behind an innovative, large-scale, and distinctively young-skewing platform”, analyst Brian Wieser, who gave Snap a “sell” rating, told Bloomberg Thursday.

At the same time, it’s important to take into account that technology companies are always trying on new things and working on experiments, but only a few of those projects actually make it to market.

Snapchat’s success has forced larger tech services like Facebook, Twitter (TWTR, Tech30) and Instagram to clone its features, with mixed success. “It’s definitely a function of how Snap is perceived-not every company could get away with this”, says Thomas Ivey, a partner at law firm Skadden, Arps, Slate, Meagher & Flom, who is based in Silicon Valley. Instead, he said, it has more in common with Twitter, which has struggled since going public.

The share sale was the first test of investor appetite for a social media app that is beloved by teenagers and people under 30 for applying bunny faces on to selfies, but has yet to convert “cool” into cash.

While the higher-than-expected pricing looks good for Snap, its troubles aren’t over.