On Thursday, Feb. 2, Snap Inc. released their initial public offering of market stocks to the New York Stock Exchange or NYSE with its trading value reaching to $24.48 a share. This sale of SNAP is the largest since Chinese e-commerce company Alibaba’s IPO in 2014. Snap’s offering price on Wednesday was $17 a share, but in the next day, this company had attracted several investors to partake in this millennial-driven company, closing its price up 44 percent. At the opening price of $24, Snap’s market capitalization values at $34 billion, while Twitter’s is about $11 billion and Facebook reaches up to $495 billion.
So, why are these numbers important? Generally, the stock market is a global marketplace where investors trade goods and services in the form of equities. This organized market carries rules and supervises various players who are involved in the exchange of equities. Each player is involved with all other players to create a systematic, efficient market that naturally produce measurements of stock values to determine the current state of the economy.
As a financial barometer, the stock market has become an integral and influential part of the financial decision making process for everyone from the average American family to the wealthiest businessman. So, even if you don’t invest a cent in stocks, you should still understand how the stock market works.
Co-founders Evan Spiegel and Bobby Murphy were pushed to the top tier of such technology billionaires, reaching their IPO before other successful startups like Uber and Airbnb who may follow behind Snap’s lead.
Spiegel, who was a Stanford dropout, describes himself as more of a product designer than a tech nerd. He became the youngest chief executive of a company to be listed on NYSE.
While Snap is only a fraction of Facebook’s revenues, Snap may appear threatening to Facebook since Snap’s stocks have ten times higher of a demand than the supply. Snapchat also has much more room for growth and improvement to both their users and advertisers, in the attempts to support consumers’ high expectations.
The app designed for mobile phones is not about typing thoughts into the media, but about sharing spontaneous photographs and videos and sometimes placing surreal filters over images and selfies. Snapchat was created to be anti-Facebook and branched out differently than most social media. A world of “likes” and a history of posts, Snapchat wanted to develop a platform for spur-of-the-moment communication that would instantly disappear.
In a video created for the public offering, Spiegel, who may become more of a public figure, explained the purpose of Snapchat on “why people love creating Snaps. Because there isn’t pressure to feel pretty or perfect. Self-expression isn’t a contest, it’s not about how well you can express yourself, it’s about being able to communicate how you feel, and doing that in the moment.”
Compared to other successful technology IPOs, Facebook went public on May 2012 at $38 per share, gaining only 0.61 percent in its debut closing. Twitter went public on November 2013 at $26 per share while gaining a 72.69 percent increase and closing at $44.90. Alibaba released their IPO on September 2014 at $68 per share, and it had gained 38.07 percent revenues while closing at $93.89.
Financial analysts believe that the Snap shares have just been a rush of enthusiasm for investors. Interpreting the first day evaluation will not determine the future long-run share values of this company. Clement Thibault, senior analyst at Investing.com, says, “Every technology company gets some kind of grace period when it enters the market, but as soon as Snap’s first earnings report comes out, it will be compared to other companies.” Only time can tell, but for now, the Venice, California-based company’s headquarters’ office has employees celebrating with cheers and excitement that is exploding inside the building.
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