The company behind the popular picture messaging app, Snapchat, went public recently with stocks rising to 44 percent on their first day of trading, making the company worth $28 billion.
On the first day of trading, the stock closed at $24.48, exceeding the expectations of many financial analysts who estimated the stock at $17 a share. By the stock’s first weekend, the IPO (Initial Public Offering) rose another 11 percent to $27 a share. By the end of its first week, the stock had risen nearly 60 percent from its original estimated IPO.
At the beginning of last week however, the stock reached nearly $30 a share, causing a massive selling of shares. The stock then dropped 22 percent on Monday and Tuesday, however a resurgence of buying is driving it back up ever so slightly.
Upon having their company go public, co-founders of Snap Inc. Evan Spiegel and Bobby Murphy instantly became technology billionaires. Their popular app, Snapchat quickly surpassed Twitter’s value in stock and is posing to be a true threat to Facebook.
It’s estimated that nearly 160 million people use Snapchat everyday while over 2.5 billion snaps are sent. Also, the average user spends over thirty minutes a day using the app.
After Snap Inc. going public, social media giant Facebook has been put in a major amount of pressure as more and more users have made the switch to Snapchat. Back in 2013, Facebook owner Mark Zuckerberg offered to buy Snap Inc. from Spiegel and Murphy for 3 billion dollars. At the time, the company only had six employees that all currently have fortunes larger than Zuckerberg’s original deal.
As a means of which to regain popularity, Facebook has recently been copying similar ideas from Snapchat.
Josef Schuster, founder of IPOX Schuster, told The Guardian, “The stock market conditions are good, there’s cash available on the sidelines so the market will welcome an offering like this. Investors are optimistic about the company’s revenue growth, so while there’s some uncertainty, they still want this stock in their portfolio.”
However, others believe Snap Inc.’s stock will not be able to continue to grow to the height of Facebook.
“While the company’s optimism for its potential growth makes sense given the trajectory of previous social media darlings, there’s reason for caution,” said Jessica Liu of Forrester Research, in an interview with CNN.”
She continued with, “First, Facebook’s success is an anomaly. Second, while Snapchat has a grasp on mobile video, it’s TV-like revenue pursuit is new and untested. Snapchat has much room for improvement in the areas of user growth and delivering data and measurement to advertisers in order to live up to its high expectations.”
However, the co-founders of Snap Inc. still are multi-billionaires with over two-thousand employees but no real headquarters.
With more and more ideas coming from Snap Inc., the company is hoping to grow and innovate with hardware and other apps.