Snap, which owns photo messaging app Snapchat, has priced its initial public offering above its indicated range, as investors lap up shares in the first big US technology listing for several years. The FT's Hannah Kuchler reports.
Edited by Paolo Pascual. Pictures from Reuters, Getty and Bloomberg.
So what we're hearing are investors are keen on buying into Snaps IPO. One of the main reasons for this is probably because there haven't been very many tech IPOs in the last few years. The last major US one was back in November 2013 which was Twitter. Snap has also got a very engaged user base of young people, people we call Generation X and Millennials who advertisers are very keen to reach now that they're not on TV. So I think there's a lot of hope that they will be spending those marketing dollars on Snap.
Investors have three main concerns about the Snap IPO. The first has been that they are not issuing votes with their shares. Now other Silicon Valley companies like Google and Facebook have had unusual share structures that give a lot of power to the founders. But Snap is taking this to the extreme and going public with no votes for ordinary shares. The second major concern has been about increased competition. So we've seen that Snap has had more competition from Facebook, especially Facebook's Instagram which has copied its main feature of 24 hour photo collections called Stories and had quite a deal of success with it. People are worried that users and advertisers will stick with Instagram and not go to Snap. And the third is related to that, which was in the fourth quarter of last year, its IPO filings show a kind of a slowing of user growth. Now that is a bit reminiscent, for some investors, of Twitter's experience as a public company and may worry them.
So everyone is watching the Snap IPO very closely, because it has been one of the only US tech offerings in a long time. There are lots of other so-called unicorns or mega unicorns which are private companies with very high valuations. A unicorn is officially a billion dollars or more. But we're looking, you know, at Snap at about $20 billion. Uber is the largest at over $60 billion. And people are going to look at Snap and see if it is successful, whether that will entice more people into the public markets and create more opportunities for investors.