Snap, the parent company of the ephemeral messaging service Snapchat, outstripped expectations for its stock market debut Thursday, closing at $24.48 per share. That means the social network once thought of mostly as a tool for sending naughty pictures is now worth approximately $28 billion — more than Macy’s and American Airlines’ as of Thursday.
The IPO was a great success for co-founders Evan Speigel and Bobby Murphy, who founded the company in 2011 out of their Stanford University dorm rooms. Now both are billionaires before the age of 30.
The company saw a healthy pop in its first moments of trading, opening at $24 — roughly 40 percent higher than the company’s price of $17 per share, and far higher than the company’s original $14-$16 range.
The higher trading price demonstrated the great demand Snap had for its initial public offering. Some are hoping that Snap’s debut can revive a lagging IPO market, as Barron’s reported, and encourage other tech firms to make their debuts.
Experts said the excited reaction to the Snap debut could easily nudge firms on the fence about going public into the market. “If you’re anywhere within the neighborhood of going public, you might as well go and catch some of the money that people are throwing around,” said Rob Enderle, principal analyst at Enderle Group, who compared the excitement over an unprofitable company to the heady days of the dot-com boom.
While Snap had a fairly successful debut, the question now is whether it can keep that momentum. In the long-term, will Snap look more like a Facebook, a Twitter, or will it carve its own path?
Social media firms that have gone public have had checkered success Some analysts say Snapchat’s appeal, and particularly its engagement numbers, justify its valuation and make it a good candidate for succeeding more in the vein of Facebook