Published: Fri, March 03, 2017
Research | By Kayla Price

Snapchat value tops $24B after IPO pricing

Snapchat value tops $24B after IPO pricing

In its public filings, and on its corporate website, Snap refers to itself as "a camera company".

Snapchat's parent company Snap is working on a new hardware product, which happens to be a drone.

Shares started trading at $23.70, up from their IPO price of $17. It was a smooth IPO.

But Snap's core business is still its messaging app, which has a much smaller audience than rival Facebook. The stock is now trading at almost $26/share, boosting Snaps market cap to just shy of $30 billion. But Snap's cameo in Twitter's annual report is a sure sign that the Los Angeles startup has officially arrived.

Snap's IPO valuation of $23.8 billion and 2016 revenue of $404.5 million gives a ratio of 58.8.

"With around 150 million daily users, Snapchat is more popular than Twitter", said Nicholas Hyett, equity analyst at Hargreaves Lansdown.

But its user growth has slowed down in recent months.

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Snapchat went public at what was an interesting point in the company's history.

"Just six years ago", says CNN money, "Spiegel was working on a failed start-up called Future Freshman, which he later said was used by "no one ... except my mom".

Snap was founded in 2011.

The amount, on paper, at least, puts Spiegel in a rarified club of tech billionaires alongside Bill Gates, Google co-founder Larry Page, and Oracle co-founder Larry Ellison.

The social-media industry is having one of its most eventful and exciting days in a while, with the Thursday trading debut of Snap Inc. If they don't like the company's direction all their screaming won't carry any weight at all. And it expects anyone buying up to a quarter of its shares to agree not to sell them for a year. In 2015, it reported losses of $372.9 million; a year later it documented a loss of $514.6 million.

Snap wants to do the same. That's a page out of Amazon CEO Jeff Bezos' playbook, created to dominate through expansion. In fact, the smart tech CEO will look to Bezos as the model tech manager, bound by two main tenets: 1) trust me, and 2) don't expect profits anytime soon.

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