Snap Inc is nearing its IPO and the company expects investors buying up to a quarter of the shares, to agree to hold them for as long as a year. The company expressed these sentiments on Monday, and they are a mark of Snap’s confidence in its own IPO that is scheduled to take place in a couple of days.
Snap said that while it does not have any binding commitments as of now, it expects that investors will accept such a lock-up period, were it to impose one upon them. Should that happen, it would be a clear sign of strong stock demand among investors.
Snap expects as many as 50 million class A shares t be subjec to a lock up agreement of one year. The company said as much in its latest IPO registration document with the U.S. Securities and Exchange Commission on Monday
In case you are worrying about why Snap is taking such a personal interest in whether or not investors decide to sell their stock early — locking up stock and preventing it from being sold on early helps companies — particularly those that are early come to the stock markets — monitor and moderate stock volatility, by preventing folks with an intimate knowledge of company affairs from selling their stock and potentially affecting its performance on the stock markets.
Snap Inc is apparently looking to sell 200 million shares at a $14 to $16 price range. The company expects to raise somewhere around $3 Billion at a valuation between $19.5 billion and $22.3 billion.
Meanwhile, signs of strong demand for Snap stock among investors are already there. After all, there was initial talk about how investors were going to boycott the IPO because the existing rules did not allow them to have any say in the management of the company regardless of how much stock they purchased — simply because the stock being sold through the IPO does not carry any voting privileges.
However, we are now hearing reports that Snap’s IPO has already been oversubscribed. Meanwhile, the IPO is right around the corner and while many analysts have gone so far so as to brand it as the biggest tech IPO since Facebook, it will also help bring the mood of the market out into the public for other tech companies that are considering going public this year.
