San Francisco/New York: Snap Inc. raised $3.4 billion in its initial public offering, pricing the shares above the marketed range.
The company sold 200 million shares for $17 each, according to a statement on Wednesday. The price gives the company a market value of about $20 billion, based on the 1.16 billion shares outstanding after the offering.
Adding unexercised stock options and other convertibles for a total of 1.39 billion fully diluted shares, Snap would have a fully diluted value of about $23.6 billion, the person said.
It’s a “nosebleed” valuation, but “there’s a nosebleed’s worth of demand,” said David Kirkpatrick, CEO of Techonomy Media. “There is a huge amount of people who really just want to get in on the hot new thing, who see this as the first opportunity of its type in a number of years,” Kirkpatrick said in an interview on Bloomberg TV. Still, “they’ve got some serious work to do to actually make a real business that makes profits.”
Snap offered the shares for $14 to $16 each. Orders for the IPO were concentrated at about $17 to $18 a share, people familiar with the process said Tuesday. Demand outpaced the number of shares being offered by a multiple of 10, according to people familiar with the situation.
Given the interest, Snap could have priced the shares at $19 each, one person said, but executives wanted to ensure that shares would make a decent gain in their debut.
The maker of disappearing photo app Snapchat, based in Los Angeles, is the first technology or communications company to go public in the US in 2017. It’s also the biggest social-media listing since Twitter Inc., more than three years ago, and the daily compulsion of more than 150 million—mostly millennial—users.
The stock will start trading Thursday, listed on the New York Stock Exchange under the symbol SNAP. The debut may benefit from good timing: US equities advanced Wednesday, setting records on the heaviest trading volume so far this year.
Morgan Stanley and Goldman Sachs Group Inc. led the offering. Goldman Sachs will be the stabilization agent, ensuring the first day of trading goes smoothly. Bloomberg