Snap has given a final price for its IPO, setting the company’s valuation at nearly $24 billion with a price of $17 per share, according to a report by The Wall Street Journal.
With that, it looks like Wall Street had plenty of appetite for Snap despite multiple major concerns about the company’s business. Slowing user growth, rising burn and a dependence on Google and Amazon for its services appear to be not enough of an issue to quell demand for the first tech IPO of the year — and one of the largest in recent memory. Snap will be raising nearly $3.4 billion in its IPO.
Snap filed to go public in early February, showing a rapidly accelerating advertising business that went from $59 million in revenue in 2015 to nearly $400 million in 2016. But the company also revealed that while it had amassed more than 150 million daily active users, that growth was slowing, and its costs of revenue had ballooned to around $450 million. During the past few weeks, Snap executives and CEO Evan Spiegel met with investors in various cities to pitch the company’s stock and try to quell those concerns.
Still, Snap’s IPO will be an unusual one. Snap is selling non-voting shares in its IPO, which means that the investors buying into the company will not have any say on its direction. It’s basically a bet that the company will continue to grow and sort out its burn under the strategy laid out by Spiegel and his team and have very basically no impact on their decisions. Of course, a high stock price is important for retention and recruiting, but Spiegel is still in complete control of Snap’s destiny.
Snap will formally price its shares in a regulatory filing sometime after trading ends today, but it looks like the company has settled somewhere near the valuation that was originally reported once it started the process of going public. The company’s shares will start trading publicly tomorrow morning, and with that we’ll finally get a glimpse at what the appetite is for tech stocks this year.Featured Image: Snap