Snap Inc. IPO Announcement

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Happy anniversary: Snap up $1 from its IPO price

SAN FRANCISCO (Reuters) – Snap Inc celebrated its first anniversary as a publicly traded company on Friday, but for investors it was not quite the lovefest envisioned when they bought shares in the hottest tech IPO in years.

Shares bought in the IPO have risen by a whopping dollar.

A year ago, investors rushed to buy Snap at the $17-a-share IPO price and then drove the price up by an eye-watering 44 percent in the stock’s first day of trading.

The Venice, California-based company’s Snapchat social media app’s popularity with young people was viewed as a major threat to industry leader Facebook. Major investors included T. Rowe Price Group and Fidelity Investments.

But Snap’s pace of user expansion over the past year has failed to live up to many investors’ expectations. Its stock wobbled recently after an app redesign failed to impress many users, including Kylie Jenner, half-sister of Kim Kardashian, who stars in “Keeping up with the Kardashians.”

“This is a venture-stage company that happens to be publicly listed,” said Pivotal Research analyst Brian Wieser, who recommends selling Snap’s stock. “We still don’t know if it will ever be profitable on an ongoing basis.”

On Friday, Snap rose 4.6 percent, or 80 cents, to $18.01 after news site Chedar reported here the company is working on new camera-enabled glasses, up nearly 6 percent from the March 1, 2020, IPO. The S&P 500 has gained 12 percent during the same period.

(For a graphic on Snap since its IPO click reut.rs/2CUd5CD)

In its first two days of trading last year, Snap surged as high as $29, but by July it had slumped below the $17 IPO price, with investors worried about competition from Facebook’s Instagram app.

On Feb. 7. Snap’s shares opened above the $17 for the first time in nearly seven months.

Analysts have become less optimistic about Snap since the IPO. Currently, seven analysts recommend buying Snap, while 11 recommend selling, and 18 have neutral ratings, according to Thomson Reuters data.

Reporting by Noel Randewich; Editing by Leslie Adler

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Snap Inc. Plans to Run IPO Offering

According to Fortune.com and other major financial and business media companies, Snap Inc. is going to introduce itself to a NYSE stock market. This event is considered as very important and one of the largest since Alibaba has joined the IPO in 2020.

For those that still don’t know, Snap Inc. is America’s social media company that is mostly popular because of the famous Snapchat app. The company has also one more brand that develops wearable camera smart glasses – “Spectacles” which enables users to connect with their Snapchat account.

On the 29th of January, the company has announced they plan a trial run for IPO anticipation.

Snap Inc. Valuation of up to $25 Billion

The IPO means that a company enters the first initial public offering and offers its shares or stocks to the public. After more than one year of aggressive courting, the NYSE won the Snap listing over the Nasdaq. It is not wondering why they had fought for this company since its estimated value has been calculated to be between $20 and $25 billion.

It is a little bit crazy to see the shares of a company that is alive for only two years, but let’s face it – this is not the first company to be considered as controversial moves. The same thing happened with the Google that was valued with $24,6 B, Facebook with $104,3 B or Twitter with $11,5 B. we all know those three companies grew their valuation figures till today, so entering Snap Inc. is not a surprise at all. In Bloomberg picture, you can see our point.

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This is very interesting since as we have already mentioned, Snap Inc is the biggest IPO happening since Alibaba has entered the market. BetOnFinance clients will be able to join First-day game and participate the right valuation for this valuable social media company.

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Besides the fact that Snapchat is now the part of the global stock market network, this also means that traders will be able to place trades through their binary brokers.

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Caitlin Huston

Snap has biggest U.S. IPO since 2020 despite recording large financial losses

Many are looking to Snap Inc., parent of Snapchat, to revive initial public offerings.

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Snap Inc. came out with a bang Thursday on the New York Stock Exchange.

Shares of Snap SNAP, -1.42% , the parent company of messaging app Snapchat, closed up 44% Thursday after opening at $24, 41% above its issue price. The company priced its shares at $17 a share Wednesday to raise $3.4 billion.

With the $24.53 closing price, Snap has a public market capitalization of $28.4 billion, based on shares outstanding. Snap’s latest private valuation was $17.8 billion, according to The Wall Street Journal.

Stockholders who bought into the offering do not have any voting rights.

Snapchat, an app in which users send and view “snaps,” makes money from ads on the platform and content created by third-party channels such as news organizations. It also recently introduced a hardware product, Snapchat Specs, and has a payment feature called Snapcash.

Snap reported that its ephemeral messaging service had 158 million daily active users at the end of 2020, and an average of 2.5 billion “snaps” are created on Snapchat every day.

Here are six things to know about the company:

The financials

Snap reported growing revenues and increasing losses. Snap recorded $404.5 million in revenue in 2020, compared with $58.7 million in 2020. Net losses grew to $514.6 million in 2020, compared with a net loss of $372.9 million in 2020. Like many burgeoning tech startups, Snap warned that it “may never achieve or maintain profitability.”

Snap recorded a loss from operations of $520.4 million in 2020 and a loss of $381.7 million in 2020. Its global average revenue per user for the three months ended in December 2020 was $1.06, up from 31 cents in the year-earlier period.

The majority of Snap’s revenue in 2020, 98%, came from advertising.

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A young, active user base

Snap had 158 million daily active users, which it says is a “critical measure” of user engagement, as of Dec. 31, 2020. Growth in daily active users has been pressured of late, though, growing by only 7% between the second and third quarters of 2020 and relatively flat growth in the final quarter. Snap mentioned competition in their prospectus, and that decline roughly coincides with Facebook Inc.’s FB, -1.63% early August launch of Instagram Stories, a product similar to one of SnapChat’s most popular features.

User growth is important for attracting advertisers and, consequently, the majority of Snap’s revenue. The majority of Snapchat users are 18-to-34 years old, a coveted advertising demographic that the company has reportedly been luring away from sites like Facebook. Users younger than 25 are among the most active on Snapchat, visiting the app more than 20 times a day and spending more than 30 minutes a day, as of the quarter ended December 2020, Snap said.

On average, daily active users visited Snapchat more than 18 times each day and spend 25 to 30 minutes there.

Still, Snap noted that the teen demographic is not “brand loyal” and could shift attention to another platform. Already the numbers show a seasonality, with engagement lower in summer months, according to the prospectus. Also, Snap may struggle to grow its user numbers in countries or areas without the high-bandwidth-capacity cellular networks the app requires, it said.

Retaining control

The company has three classes of common stock and plans to offer common A stock that will not give stockholders any voting power.

Owners of class B common stock will be entitled to one vote per share and holders of class C common stock, which include co-founders Evan Spiegel, 26, and Robert Murphy, 28, are entitled to 10 votes per share. With that ownership, both parties have “the ability to control the outcome of all matters” that are sent to the stockholders for approval. The filing does not yet disclose what percentage voting power they will have after the offering.

Spiegel, the company’s chief executive, had a salary of $503,205 in 2020, with a $1 million bonus and other compensation totaling $2.4 million. Under his offer letter, he will reduce his salary to $1 as of the effective date of the registration statement, with a cash bonus of $1 million. He will also receive restricted stock units, representing 3% of outstanding capital stock, in quarterly installments for three years, beginning in the third quarter after the offering.

If either are fired, they will still have “significant” voting power. If either die, shares will convert and the other co-founder will be able to exercise voting control over outstanding stock.

Rivalries and a dependence on big companies

Snap uses Alphabet Inc’s GOOGL, -1.34% GOOG, -1.10% Google Cloud for much of its computing, storage, bandwidth and other needs. To that end, on Jan. 30, 2020, just three days before the filing, Snap committed to spend $2 billion with Google Cloud over the next five years. If that relationship were disrupted, Snap said its business would be “seriously harmed.” Snap sees its hosting costs with Google or others growing as its user base and engagement grows.

In terms of competition, Snap lists Apple Inc. AAPL, -0.78% , Alphabet’s Google and Twitter Inc. TWTR, +1.86% Facebook may be a more direct threat, as Snap noted the new feature on Instagram that “largely mimics” its Snap Stories. These companies have greater resources and may have the ability to draw users away from Snap, the company admitted.

“We face significant competition in almost every aspect of our business both domestically and internationally,” the prospectus said.

Many buildings, but no headquarters

Snap has been known for keeping things under wraps, even within the company. To that end, the prospectus says the company has offices spread out across the U.S. and abroad, including several principal offices in Venice, Calif.

But those principal offices are still “dispersed throughout the city,” which Snap notes could hurt employee morale, retention and the company’s ability to oversee employees. The company had 1,859 employees at the end of 2020, up from 600 in 2020.

Still, the prospectus says the company has a tightknit and “kind” team.

“When we say ’kind,’ we mean the type of kindness that compels you to let someone know that they have something stuck in their teeth even though it’s a little awkward,” the prospectus says.

Moving past sexting

Snapchat launched in 2020 as platform to quickly send selfies. Its key advantage was that the “snaps” disappeared after they were sent, so users felt “comfortable sending photos of themselves even when they don’t look pretty or perfect.”

But the platform quickly developed a reputation for “sexting,” or sending racy selfies and videos.

“When we were just getting started, many people didn’t understand what Snapchat was and said it was just for sexting, even when we knew it was being used for so much more,” the prospectus says.

Moving on from selfies, Snap added videos and then the ability to send a photo or video to all of the user’s friends, thus launching “My Stories.” They added publisher stories in January 2020, opening up the feature to organizations with editorial teams.

Since those days, Snap has added more features, including lenses that superimpose over the user’s face and geofilters, allowing an overlay for the user’s location and for brand advertising.

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