Snap founder Spiegel rings up $272m on IPO
Snap Inc's shares opened for trading on Thursday at $24 on the New York Stock Exchange - a day after pricing at $17 per share.
The owner of the popular Snapchat messaging app raised $3.4bn (€3.23bn) in its initial public offering, pricing 200 million shares on Wednesday night above its stated range of $14 to $16 dollars a share.
The shares traded up 45pc at $24.67 each. Snap co-founder Evan Spiegel, who last night earned $272m (€259m) on the offering, showed up to the floor of the exchange in a suit and tie to ring the opening bell before leaving the building to watch festivities away from the spotlight he famously eschews.
The IPO has tested investor appetite for a social media app that is beloved by teenagers and people under 30 for applying bunny faces and vomiting rainbows onto selfies, but has yet to convert "cool" into cash.
Despite a nearly sevenfold increase in revenue, Los Angeles-based Snap's net loss widened by 38pc last year.
It faces intense competition from larger rivals such as Facebook's Instagram as it grapples with decelerating user growth.
Snap began trading into a hungry market. The book was more than 10 times oversubscribed and Snap could have priced the IPO at as much as $19 a share, but the company wanted to focus on securing mutual funds as long-term investors rather than hedge funds looking to quickly sell, a source familiar with the matter said.
Underwriters often price their IPOs below demand in order to ensure a first day spike. Such a pop, though positive for a company's momentum, does not ensure long-term success. Share of social media company Twitter surged 93pc when it first opened on the New York Stock Exchange in 2013, but are now trading nearly 40pc below the IPO price.
Snap's offering was well-timed, with investors clamouring for fresh opportunities after 2016 marked the slowest year for tech IPOs since 2008. The broader market has also been buoyed in the months following the election of US President Donald Trump, with the benchmark S&P 500 surging 10pc since the election amid optimism around the administration's domestic proposals, including plans to reform taxes paid by businesses. (Reuters)