Snap IPO in US reportedly priced at $17 per share

By Barry Eitel

SAN FRANCISCO

Snap, the parent company of the popular video social network Snapchat, will price its initial public offering (IPO) at $17 per share, according to several media reports Wednesday.

The pricing puts the company’s valuation at $24 billion, making Snap’s Wall Street debut one of the largest in history.

Reports of the pricing emerged after the close of markets when several sources familiar with the matter spoke to media outlets, including the Wall Street Journal and CNBC.

Snap is scheduled Thursday to start selling off 200 million shares made available for its IPO.

The pricing puts Snap just under the record of the largest IPO ever — set in 2014 by Chinese online retailer Alibaba.

Alibaba’s value was set at $25 billion at $68 per share. While it has fallen well below its IPO in the past three years, it closed Wednesday at $104.04.

When Facebook went public in 2012, it had a valuation of $16 billion, while Twitter set its IPO price at a cautious $11 billion when it debuted in 2013.

A series of rocky quarters caused investor excitement with Twitter to abate and the stock closed at $15.79 on Wednesday – a striking contrast to the $26 stock price on its first day.

The value of Facebook’s stock, which closed at $137.42, has more than quadrupled since its IPO.

Investors are now wondering if Snap will be more like Facebook or Twitter — services initially popular with teenagers and young adults before reaching a much wider audience.

Much like Twitter before its IPO, Snap has never turned a profit.

Coupled with the fact that many lauded tech IPOs such as Groupon and Fitbit fell in their first years, some investors are wary of the excitement surrounding Snap.

“Competition from Facebook, slowing user growth rate, non-voting share structure, and large net losses all make us wary about investing, particularly at the proposed valuation,” analyst Don Dion wrote in a report published Wednesday on financial insight website Seeking Alpha. “For us, the risks far outweigh the benefits.”