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The company behind Snapchat continued to defy doubts about the company's early-stage business model and slowing user growth, jumping nearly 50 per cent in their first day of trading on the New York Stock Exchange.
Snap Inc shares jumped by $US7.58, or 44 per cent, to close at $US24.48 after the company priced its initial public offering (IPO) of 200 million shares at $US17 each yesterday.
That was above the expected range of $US14 to $US16.
Snapchat's parent company raised $3.4 billion in its initial public offering yesterday — more than the $3 billion Facebook offered to pay for the company in 2013.
Snap's closing price on Thursday valued the Los Angeles company at $US34 billion ($44.9 billion).
Snap's IPO was one of the most anticipated for a technology company since Twitter's in 2013.
The surge on Wall Street has been seen as proof, at least for a day, that there is investor demand for young — but still unproven — tech companies.
Snap could have priced the IPO at as much as $19 a share, but the company wanted to focus on securing long-term investors rather than hedge funds looking to quickly sell, a source familiar with the matter told Reuters.
Underwriters often price their IPOs below demand in order to ensure a first day spike.
Snap co-founder Evan Spiegel, who earned $272 million on the offering, showed up to the floor of the exchange to ring the opening bell before leaving the building to watch festivities away from the spotlight.
Many investors are eager to know Snap Inc's future course of action, as concerns over its valuation and corporate governance still remain.
Despite a nearly seven-fold increase in revenue, Snap's net loss widened 38 per cent last year.
There is also unease over Snapchat's user growth, which has slowed in recent months, with investors watching closely for signs the company may end up more like Twitter or Facebook
| Company | First trading day | Now |
|---|---|---|
| $US90 billion | $US395 billion | |
| $US24.4 billion | $US11 billion |
Twitter has had trouble attracting users and its stock price has also dropped, while Facebook has seen its user numbers soar along with its stock price.
Snap, which rebranded itself as a camera company last year, has built itself around image-based communication.
Its user growth has slowed down in recent months since Facebook's Instagram cloned Snapchat's "stories" in August.
The feature, which was previously unique to Snapchat, plays photos and videos shared by users in a loop for 24 hours before they disappear.
It debuted video-camera sunglasses called 'Spectacles' as its first product in November.
The product recorded short videos that could be directly shared on Snapchat.
Snap set up big yellow vending machines at various places where fans could plop down $US130 for the "Spectacles" glasses.
The vending machines popped up at new locations for about a day, and that location was shared just 24 hours in advance.
Until recently, the machines were the only way to buy the glasses directly.
ABC/wires
Topics: business-economics-and-finance, information-and-communication, science-and-technology, computers-and-technology, united-states
First posted