Snap’s IPO: Everything you need to know

Snap made its trading debut yesterday, and as expected, the internet went ‘nanners. Opinions! Up-to-the-second reports! Unique angles!

Therefore, we figured the best way to cover everything would be with a grab bag of sorts, as opposed to a single, in-depth analysis. Here goes.

First, we need to correct an error (and maybe teach you something)

In yesterday’s email, we said that “Snap stock officially began trading at $17 per share.” That’s incorrect — it began trading at $24. The $17 number was Snap’s “offering price,” while the $24 was its “opening price.” Our mistake. What’s the difference?

Here’s a great article to explain, but in short, the offering price is what underwriters large institutions (like money management firms and investment banks) buy shares for before they reach the open market. The opening price is what individual investors like you and me pay.

“I keep hearing everyone talk about the ‘first-day pop.’ What’s that?”

Snap’s shares closed at $24.48, which was up $7.48 (or 44%) from its offering price. That 44% “pop” is both good and bad.

Why it’s good: A big IPO pop generates headlines and, since Snap will sell more stock in coming years, the higher the share price is, the better (obviously).

Why it’s bad: If you’re Snap, you want the underwriters and large institutions that bought at $17/share to make some profit. But a 44% pop? That’s high (ideal pop is in the 20% range) and means bankers may have underpriced Snap’s shares. Remember — every dollar above $17 is money that Snap didn’t get (since it already sold at $17). So they left some money on the table.

Next up: A brief summary (in numbers) of what happened


  • 200m. The estimated number of shares that changed hands throughout the day, roughly 10% of total trading volume at the NYSE.
  • $28.33B. Snap’s market cap at close. In comparison, Google’s was $27.2B, Twitter’s was $24.46B, and Facebook’s was $81.74B.
  • $936m. Snap’s expected 2017 revenue, which means investors think it’s worth roughly 30x that number.
  • $272m. The amount of money co-founders Evan Spiegel and Bobby Murphy each made on the offering. They both only sold 16m of their roughly 211m shares, though. The remaining shares for each of them are worth about $5.3B.


Good day/bad day

Lots of people made a fortune yesterday, including that high school we wrote about recently, whose $15k investment in Snap’s seed round was worth a cool $50m at Snap’s opening price.

Then there’s Chris Sacca, who runs VC firm Lowercase Capital and is occasionally on Shark Tank.

On Twitter yesterday, he shared an email he received from Murphy back in 2012 suggesting he come by for lunch (clearly to try and get him on board as an investor). Unfortunately, Sacca never replied.

And finally, an article for the road…

Because reading is fun and company culture/office functionality matters.

Snapchat’s IPO Filing Comes With An Unusual Investor Warning (Washington Post)

In addition to your typical risk factors, Snap’s filing also included an unusual one: the company’s dispersed office buildings and lack of a designated HQ keep employees “siloed” and could “negatively affect employee morale.”

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