As per the Wall Street Journal, Snap has made up its mind as to its final IPO valuation and per share price. The company is hoping to go public with a valuation of $24 Billion and a per share price of $17. This is pretty much in keeping with what we envisioned earlier, except that the company appears to be in the mood of generating as much capital as possible.
The company plans to raise somewhere around $3.4 Billion in its public offering. Judging by the direction of the winds, it may even well to achieve that goal. And that would actually be a confirmation of how investors tend to go gaga over tech stock — particularly since Facebook’s debut a few years ago.
Snap really doesn’t have that much going for it at present. For instance, the company revealed that fact that user growth was slowing and that cost of revenue alone stood in the neighborhood of half a billion dollars. What’s more, the company is selling non-voting stock so any investor who puts in money will be placing their money on faith that the company’s management will do things right. You can buy all of the stock and you will still have no say in how the company is run.
There was actually a lot of hullabaloo over this particular clause with rumors that investors may refuse to participate unless Snap gave them voting rights, however, the lure of a tech IPO prevailed. Meanwhile, Snap’s team has been doing its best to instill confidence in the would be investors as well. For example, the company has been stressing on the fact that it managed to grow its advertising revenues from $59 million in 2015 to nearly $400 million in 2016.
And of course, there are the 150 million+ daily users as well. The company has quite a bit to show to investors and appears totally confident, considering that it is expecting shares to sell for $17 — beyond the $16 upper limit it has itself set . Meanwhile, Snap shares will start trading tomorrow and something tells me that the company is likely to have a good start.