Snap's shares set for trading pop after $3.4 billion IPO

NEW YORK, March 2 (Reuters) - Snap Inc's in-demand shares were set to rally on their first day of trading in New York on Thursday, after the owner of the popular Snapchat messaging app raised $3.4 billion in its initial public offering (IPO), above its price expectations.

Early indications pointed to the shares opening up at between $22 and $24, after the IPO priced on Wednesday at $17 per share. The IPO book was oversubscribed by more than 10 times, boosting the chances of a pop on the first day of trading.

The New York Stock Exchange carried out a trial run last week to make sure the third-biggest technology IPO ever goes smoothly.

Facebook Inc's eagerly awaited market debut in 2012 was marred by a technical glitch at rival exchange Nasdaq.

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After pricing its IPO at $17 a share, the owner of the popular disappearing-message app has a market value of roughly $24 billion, more than double the size of rival Twitter Inc and the richest valuation in a U.S. tech IPO since Facebook five years ago.

Snap co-founder Evan Spiegel, who last night earned $272 million on the offering, showed up to the floor of the exchange in a suit and tie to ring the bell that marks the first day of trading, before leaving the building to watch festivities away from the spotlight he famously eschews.

RELATED: Photos of Evan Spiegel and his fiancee, Miranda Kerr

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Miranda Kerr and Evan Spiegel
Miranda Kerr and her Snapchat CEO boyfriend, Evan Spiegel arrive at the state dinner in honor of President of Finland and the Prime Ministers of Norway, Sweden, Denmark and Iceland at the White House in Washington on May 13, 2016. / AFP / Olivier Douliery (Photo credit should read OLIVIER DOULIERY/AFP/Getty Images)
BEVERLY HILLS, CA - FEBRUARY 14: Miranda Kerr and Evan Spiegel arrives at the 2016 Pre-GRAMMY Gala And Salute to Industry Icons Honoring Irving Azoff at The Beverly Hilton Hotel on February 14, 2016 in Beverly Hills City. (Photo by Steve Granitz/WireImage)
BEVERLY HILLS, CA - FEBRUARY 14: Co-founder of Snapchat Evan Spiegel (L) and model Miranda Kerr attend the 2016 Pre-GRAMMY Gala and Salute to Industry Icons honoring Irving Azoff at The Beverly Hilton Hotel on February 14, 2016 in Beverly Hills, California. (Photo by Michael Kovac/WireImage)
LOS ANGELES, CA - MAY 03: (EXCLUSIVE COVERAGE) Co-founder and CEO of Snapchat Evan Spiegel and model Miranda Kerr attend the Berggruen Institute: 5 Year Anniversary Celebration at The Beverly Wilshire on May 3, 2016 in Los Angeles, California. (Photo by Vivien Killilea/Getty Images for Berggruen Institute)
LOS ANGELES, CA - FEBRUARY 15: Entrepreneur Evan Spiegel (L) and Model Miranda Kerr attend the Republic Records Grammy Celebration presented by Chromecast Audio at Hyde Sunset Kitchen & Cocktail on February 15, 2016 in Los Angeles, California. (Photo by Imeh Akpanudosen/Getty Images for Republic Records)
LOS ANGELES, CA - FEBRUARY 15: Entrepreneur Evan Spiegel and model Miranda Kerr attend Warner Music Group's annual Grammy celebration at Milk Studios Los Angeles on February 15, 2016 in Los Angeles, California. (Photo by JB Lacroix/WireImage)
LOS ANGELES, CA - AUGUST 12: Miranda Kerr and billionaire boyfriend Evan Spiegel are seen out and about leaving LAX on August 12, 2015 in Los Angeles, California. (Photo by HEV/BuzzFoto via Getty Images)
LOS ANGELES, CA - AUGUST 12: Miranda Kerr and billionaire boyfriend Evan Spiegel are seen out and about leaving LAX on August 12, 2015 in Los Angeles, California. (Photo by HEV/BuzzFoto via Getty Images)
BEVERLY HILLS, CA - FEBRUARY 14: Co-founder and CEO of Snapchat Evan Spiegel (L) and model Miranda Kerr attend the 2016 Pre-GRAMMY Gala and Salute to Industry Icons honoring Irving Azoff at The Beverly Hilton Hotel on February 14, 2016 in Beverly Hills, California. (Photo by Steve Granitz/WireImage)
LOS ANGELES, CA - AUGUST 12: Miranda Kerr and Evan Spiegel are seen at LAX. on August 12, 2015 in Los Angeles, California. (Photo by GVK/Bauer-Griffin/GC Images)
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Bookrunners on the deal completed allocating shares to the IPO buyers shortly after the start of trading on the NYSE, according to a capital markets source familiar with transaction. That clears the way for Goldman Sachs Group Inc, which is overseeing the stock's open as its stabilization agent, to allow it to start trading on the NYSE.

As stabilization agent, Goldman Sachs manages Snap's price setting and the additional allocation of shares to underwriters.

The IPO is the first test of investor appetite for a social-media app that is beloved by teenagers and people under 30 for applying bunny faces and vomiting rainbows onto selfies, but has yet to convert "cool" into cash.

Despite a nearly seven-fold increase in revenue, the Los Angeles-based company's net loss widened 38 percent last year. It faces intense competition from larger rivals such as Facebook's Instagram as it grapples with decelerating user growth.

Snap priced 200 million shares on Wednesday above its expected range of $14 to $16 dollars a share.

The sale was well timed, as investors look for fresh opportunities after 2016 marked the slowest year for tech IPOs since 2008. The launch could encourage debuts by other so-called unicorns, tech startups with private valuations of $1 billion or more.

Investors bought the shares despite them having no voting power, an unprecedented feature for an IPO at odds with rising concerns about corporate governance over the past few years from fund managers looking to gain influence over executives.

Although Snap is going public at a much earlier stage in its development than Twitter or Facebook, the five-year-old company is valuing itself at nearly 60 times revenue, more than double the 27 times revenue Facebook fetched in its IPO.

To justify its relatively high valuation and fend off concerns about slowing user growth, Snap has emphasized how important Snapchat is to its users, how long they spend on the app and the revenue potential of the emerging trend for young people to communicate with video rather than text.

Snap is set to begin trading on Thursday on the New York Stock Exchange under the symbol SNAP. (Reporting by Lauren Hirsch in New York; Editing by Bill Rigby and Meredith Mazzilli)


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