Investors smell an opportunity...
Snap Inc, the parent company of video messaging app, Snapchat, listed on the New York Stock Exchange yesterday, having issued 200m new shares at a price of $17per share.
Demand for the shares was nearly 12 times oversubscribed – and this from a company that not only has never made a profit (and lost $500m last year). New investors will be given very little say in how the company is run.
But those same investors smell the possibility of another Facebook rather than a Twitter; there hasn’t been a big new technology flotation for more than three years and markets are in an optimistic mood.
Their hope is that significant advertising revenues can be raised from a platform of 160m daily users - who access Snapchat an average of 18 times a day.
Snap's share price rose by almost 50% in value at one stage yesterday and closed 44% higher at $24.48.
That places a current valuation of Snap at $28bn, with Evan Spiegel and co-founder Bobby Murphy’s holdings worth about $5bn each.
It struck a hit with young users with its disappearing messaging function and has grown to become a social network and platform for publishers.
The company has also moved into the growing 'wearable' market - its Snap Spectacles were one of 2016's most sought after gadgets - it allows users to film from their point of view and share them on Snapchat.