Snapchat maker Snap Inc. held the biggest initial public offering ever for a Los Angeles company this week pricing its shares at $17 apiece. The company made its debut on the New York Stock Exchange on Thursday, where it quickly leaped to close at $24.48.
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- Column: The Snap IPO is a sucker's bet
- Profile: CEO Evan Spiegel is the one part of Snapchat that Facebook can't copy
Shares of Snap Inc. jumped 10.7% on their second day of trading on the New York Stock Exchange, closing at $27.09.
Friday's closing price was up 59.4% from the shares' IPO price of $17 paid by investors Wednesday. The shares debuted on the exchange Thursday morning at $24.
Some analysts predict the stock will soon plunge, with one citing a target price of $10 a share. But the big first-day "pop" raises the question of whether the IPO should have been priced higher.
Shares of Snap Inc. opened at $26.39 Friday, up about 8% from their price at market close Thursday.
Snap made its debut Thursday on the New York Stock Exchange, trading under the ticker symbol SNAP.
Shares were priced at $17 prior to trading but soared more than 40% to $24 when trading began Thursday. They closed at $24.48.
At 7:02 a.m. Pacific time Friday, Snap's stock was trading at $26.98.
NBCUniversal Chief Executive Steve Burke announced to employees Friday that the company purchased a $500-million stake in Snap Inc.'s initial public offering.
At $17 per share, the Comcast-owned media conglomerate behind Universal Studios, Bravo, USA Network, DreamWorks and more received about 15% of the shares available in this week's IPO.
With Snap shares quickly rising since their public trading debut Thursday, NBCUniversal's allotment was worth $784 million by early Friday.
But don't expect the company to sell soon. NBCUniversal was the first advertiser on Snap's Snapchat app and the first major network owner to commit to developing shows for Snapchat, such as spinoffs of the "The Voice" and "Saturday Night Live." Snap and NBCUniversal also collaborated around the 2016 Olympics. And NBCUniversal owns portions of media start-ups BuzzFeed and Vox -- two other key business partners of Snap -- through $600-million worth of investments.
"It is rare to have the opportunity to invest at this stage in a company as visionary and dynamic as Snap, and it is a compliment that they chose NBCU as a partner," Burke told his employees.
Snap declined to comment.
A California high school has made millions of dollars from the initial public offering of shares in Snap Inc., the company behind the Snapchat photo messaging application.
The board of the Saint Francis High School in Mountain View agreed to invest $15,000 in seed money in Snap in 2012, when the company was just getting started.
It had been invited to do so by one of the student's parents, a venture capital investor, the high school president says in a letter issued to the school community Thursday.
The school held onto the investment until this week, when Snap shares sold for $17 each in an IPO. The share price rocketed 44% higher when trading began Thursday.
The school was quoted by media including website Quartz as saying it sold two-thirds of its shares at $17 each, to raise $24 million.
“The school's investment in Snap — which this morning announced the completion of its IPO — has matured and given us a significant boost,” said the high school president, Simon Chiu, in the letter.
At the Venice Whaler Bar & Grill about a mile south of Snap's main offices, about 250 people had gathered by Thursday afternoon. A bartender said they had begun arriving by mid-morning.
Wearing Spectacles, T-shirts decorated with Snap's ghost logo and name badges with bitmojis, they filled the upper level of the bar. They looked out on the boardwalk and sunny beach while soccer and college basketball games — as well as CNBC, which broadcast Snap’s stock price throughout the trading day — played on TV sets.
Some of them snapped photos using Snapchat lenses as they downed beers, margaritas and shots, periodically erupting in cheers.
"I think we're all feeling pretty good," said one member of the group, who declined to give her name.
Workers celebrated the IPO on social media, too.
Snap Inc. shares jumped on the first day of trading, achieving what's known as a "pop." Here's how the maker of Snapchat sizes up against other recent tech IPOs.
Chris Sacca — an early investor in Twitter and Uber, among other companies — apparently received an invitation from Snap's Bobby Murphy in 2012, when Snapchat was in its infancy.
Looks like that was an opportunity Sacca didn't take.
Today, he's good-naturedly kicking himself.
Shares of Snap Inc. closed at $24.48, up 44% from its IPO price.
Snap stock opened at $24 a share on the New York Stock Exchange Thursday morning.
The stock was priced at $17 on Wednesday.
Now that Snap Inc. is publicly held, stock analysts are weighing in with their initial forecasts for the shares, and some are quite bearish.
Brian Wieser, an analyst with Pivotal Research Group in New York, initiated coverage with a “sell” rating and a year-end target price of $10 a share.
That’s less than half the price at which Snap, the Venice-based maker of the Snapchat app, was changing hands during its first trading day. The IPO itself was priced at $17 a share.
“Snap is a promising early-stage company” but faces several obstacles, including “aggressive competition” and a “core user base that is not growing by much,” Wieser wrote in his note to clients. “Investors also will be exposed to what appears to be a sub-optimal corporate structure operated by a senior management team lacking experience transforming a successful new product into a successful company.”
Anthony DiClemente of the investment firm Nomura Instinet also expects Snap’s stock to sink. He gave the stock a “reduce” rating in his initial report and a price target of $16 a share.
He wrote that the “upside in [SNAP] shares is limited” by several factors, including “already slowing growth in daily active users” and “fierce competition from larger rivals such as Facebook” and two Facebook divisions, Instagram and WhatsApp.
Snap’s shares “are fairly valued at best at the IPO price,” DiClemente wrote.
Snap Inc. set up two food trucks Thursday near its offices on Market Street offering free cheeseburgers and ice cream to all comers. A taco truck arrived in time for the lunch hour.
A steady stream of people, mostly skateboarders, lined up for food. A few shouted anti-Snap comments as they waited for their meals.
Mike Lindley, a protestor and organizer with Veterans for Peace, was trying to encourage people to stay away from the trucks, which he saw as simply a way for the company to garner good publicity. Lindley said he moved to Venice in 1968 after serving in the Navy and now stays on a friend's couch because he can't afford rent.
"I want to see them actually working with the community," Lindley said of Snap -- for example, by demanding that the city open the public restrooms on the beach at night so the homeless can use them.
Darick Breland, who manages a clothing store a few blocks away, didn't mind accepting free food from Snap. "I'll take their business, too," he said.
But Breland objected to Snap's effect on local companies. He said he has watched as business owners along the oceanfront got bought out to make room for Snap facilities. Plus, he said, Snap employees used to visit local coffee shops and restaurants, but now that the company has a cafeteria, they rarely do.
Breland said that what bothered him the most was Snap workers' attitude toward locals. "They got a badge, they don't say nothing to you," he said. "You can say hello."
At lunchtime, some protestors grew louder and more aggressive, yelling and cursing at Snap employees who were walking in and out of the company cafeteria building. Police repeatedly warned them not to block the sidewalk and street.
This post was updated at 12:45 p.m. to describe an escalation of aggression.
Shortly after Snap Inc. began trading on Wall Street on Thursday, Snapchat founders Evan Spiegel and Bobby Murphy sat down with The Times to discuss the historic IPO and the company's future.
Spiegel, 26, is one of the youngest entrepreneurs in history to take a company public and perhaps the youngest-ever to lead a $30-billion enterprise.
But the milestone still hadn’t felt real to him, just over an hour after shares of the Snapchat app maker started trading on the New York Stock Exchange.
“How do we feel? We were just thinking about how do we answer that question,” an exhausted Spiegel said, looking at his co-founder Bobby Murphy beside him. “It’s exciting.”
An hour and a half after Snap Inc. shares began trading on the New York Stock Exchange, about 30 protesters had gathered at the corner of Market Street and Pacific Avenue in Venice, near the company’s offices. They carried signs that said "Venice is a community, not a corporate campus" and "Snap killed Mom and Pop."
Nate Hansen, 24, was one of the first protesters to arrive, riding a skateboard he’d painted. The Connecticut native moved directly to the Los Angeles beachside neighborhood in 2014 to be an artist. Today he lives in an apartment near where Jim Morrison once lived and sells his paintings on the boardwalk.
"I'm living the dream," he said.
But Hansen is worried about rapid change in the neighborhood, including rising rents and the takeover of local cafes and other properties by Snap. "This is one of the few remaining artist communities left," he said.
Hansen said he's not anti-Snapchat — "I love Snapchat! Can that be on the record?" — and relates to founder Evan Spiegel's desire to work on the beach. But he called it "selfish" for a company to take over oceanfront businesses and residential properties.
Hansen said he'd like to see the company at least move "up and inland," occupying second-floor lofts so small businesses can keep operating at street level.
"Anyone's welcome here — it's Venice," Hansen said. "But don't come here and try to take it over."
Mark Rago of the Alliance for the Preservation of Venice, which organized the protest, said the group's chief complaints are that Snap is using residential properties for business, taking up parking spots and cluttering public streets and sidewalks with private shuttles, crosswalks and security guards.
Rago said he and others had been harassed by security guards outside unmarked Snap offices, and that the guards deter tourists from visiting adjacent businesses.
Also among the protesters were half a dozen construction workers, members of Carpenters Union Local 1506 who objected to Snap's hiring of non-union contractors.
Snap Inc. founders Bobby Murphy and Evan Spiegel each made $272 million by selling shares in their company's initial public offering. And they each made more than $1 billion in paper gains as shares soared on the first day of trading.
Snap shares closed Thursday at $24.48, up from $17 when shares priced late Wednesday, a gain of 44%.
At Thursday's closing price, Murphy's remaining shares — he and Spiegel each sold only a small percentage of their holdings in the IPO and continue to own hundreds of millions of Snap shares — are worth $5.2 billion, a gain of $1.6 billion since this morning.
Spiegel has gained that much, and more.
Along with his Snap holdings going into this week's offering, the Snap chief executive was granted about 37 million additional shares when the public offering closed. Those shares are now worth about $911 million.
This post was updated at 2:10 p.m. with figures that reflect the stock's closing price.
It looks like some investors made unfortunate snap decisions today.
As Snapchat app maker Snap Inc. began trading under the symbol SNAP in this year’s biggest initial public stock offering, the price of an unrelated company named Snap Interactive Inc. also briefly surged early in the session.
Snap Interactive, which operates dating apps such as FirstMet and live video communication apps, jumped as high as $8.89 a share — up 18% from Wednesday’s closing price — before quickly falling back down.
Snap Interactive’s stock is down 63 cents on the day, or more than 8%, to $6.92 a share. Judy Krandel, Snap Interactive’s chief financial officer, said that “as a matter of policy we don’t speculate on our stock price.”
The same confusion might have applied to shares of Snap-on Inc., a leading maker of tools for the automotive industry.
Snap-on’s stock initially rose as high as $173.50 a share, up 65 cents from Wednesday’s close, before abruptly turning lower. Snap-on shares are down $1.63 on the day, or 0.9%, to $171.22.
With all the publicity about Snap’s IPO, at least one person expected the confusion:
Hollywood has mixed views on its budding relationship with Snap Inc.
Several TV networks and publishers have taken the bold step of creating original, bite-sized programming for Snapchat’s video and publishing platform, Discover.
Yet not everyone is ready to go all in with Snapchat. The major movie studios and production companies have preferred to use the app as a marketing tool for their big-screen offerings, hoping to target teens and young adults who increasingly devour content though mobile phones.
The most anticipated technology stock offering in years is not without significant risk.
Here's a splash of cold water for investors to consider when deciding whether to buy a piece of Snap Inc., the Venice photo and video messaging app.
- Snap is losing gobs of money. In 2015, Snap lost $373 million on revenue of $58.7 million. Last year, revenue grew to $404.5 million, but losses grew to $514.6 million. The gap is shrinking, but how much longer before Snap makes a profit?
- Snap is overwhelmingly reliant on young users . In its S-1 — a form that companies planning to go public file with the SEC — the company identified as a risk the fact that the majority of its users are between 18 and 34 years old, a demographic that “may be less brand loyal and more likely to follow trends than other demographics.”
- How will Snap keep adding users? Growth is already slowing. If it can't reverse that in any meaningful way, Snap will have make sure its existing users stay on the app longer. That amps up the pressure to deliver even more addictive features. Lastly, Snapchat requires well-established cellular-based data networks because of the heavy data usage. That limits the app's appeal in developing markets where the company could seek growth.
- Snap has no headquarters. Instead, it's spread out in a complex of offices in Venice. Of the 10 California-based technology companies with the biggest IPOs over the last 15 years, all have had headquarters . Snap acknowledged in its S-1 that this could be a problem. “This diffuse structure may prevent us from fostering positive employee morale and encouraging social interaction among our employees and different business units,” the filing stated. “Moreover … we may be unable to adequately oversee employees and business functions.”
- Snap's competitors are already copying its best-known features. The company insists it will find a way to outthink and outpace its rivals.
Shares of Snap Inc. have traded as high as $25.42 less than an hour after the Los Angeles company debuted on the New York Stock Exchange.
That's up nearly 6% from its $24 stock-market debut and up nearly 50% from the $17 IPO price that investors paid Wednesday.
At 8:59 a.m. Pacific time, Snap's stock was trading at $24.90.
Los Angeles Times photographers first covered Snapchat in 2013 when founders Evan Spiegel and Bobby Murphy worked with a few employees in an old building on Ocean Front Walk in Venice. Let's just say it's grown since then. See the evolution.
Snap Inc. started trading Thursday morning at $24 a share in the Los Angeles company's stock market debut.
The company priced its shares Wednesday at $17 apiece. The opening price is a 41.2% bump from that.
Shares quickly jumped, hovering above $24.60 in the first few minutes of trading.
Snap's market capitalization is about $33 billion.
This post was updated at 8:26 a.m. to include more details.
The potential opening price for Snap shares keeps going up. Now $24.50 is the top bid, which would be a 44% premium over what big funds paid Wednesday.
It looks as though Snap will open with a valuation of about $33 billion. For comparison, Twitter Inc. opened at $32 billion in its New York Stock Exchange debut in 2013.