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Snap, the owner of the vanishing photo app Snapchat, did not see its share price gains disappear at the end of its first trading day.
The California-based company, which popped 41 per cent in its trading debut, finished the day 44 per cent higher at $24.48 — giving the company a valuation of more than $29bn.
The initial public offering was priced at $17, above the indicated range of $14 to $16, with the shares opening at $24. But a number of analysts have been critical of the company, which turned a loss of $515m last year and that issued shares with no voting rights.
Anthony DiClemente, an analyst at Nomura’s Instinet, initiated coverage with a “reduce” rating and a $16 price target, citing slowing growth and lofty valuations. He said:
Snap Inc. is becoming a public company just as its user growth and monetization growth rates are beginning to meaningfully slow. We believe that upside in shares is limited by 1) already slowing growth in daily active users; 2) slowing monetization (average revenue per user) growth; 3) fierce competition from larger rivals such as Facebook, Instagram, and WhatsApp; and 4) rich valuation relative to current and future growth. We see Snap’s revenue opportunity as constrained relative to expectations and, as such, we think shares are fairly valued at best at the IPO price.
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