Snapchat: Snap Shares Rise More than 45%

Snapchat
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Shares of Snap started trading more than 40% higher than their original IPO price, which was $17 per share. Now the company is trading at $24.94 by mid-day trading.

After months of rumors, Snap’s IPO has set the stage for┬áthe future of the camera company. Snap’s performance illustrates investors expectations for the company and that the corporation will continue to make money.

Yesterday, Snap was priced at $17 per share, giving the company a valuation of around $24 billion. Snap raised $3.4 billion in its IPO, presenting the company plenty of money to move forward and grow despite high costs to keep the business moving.

After opening at $24, shares of Snap reached $25 per share, but since then trading has fallen below that range. But, a stock price around $24 per share would value Snap at around $30 billion. In comparison, Twitter is worth a little more than $ 11 billion.

Snapchat Spectacles
NEW YORK CITY, NY- December 21, 2016: Snapchat’s Snap Inc. Fifth Avenue pop-up store sells Spectacles at Bot vending. (NYCStock / Shutterstock.com)

It is important to note that investors who are buying shares in Snap’s IPO are buying non-voting shares for the company. As a result, investors are hoping the company will continue to grow under the guidance of CEO Evan Spiegel and his team. Since, Spiegel and co-founder Bobby Murphy will have control of voting shares of the company and will, for the most part, not be controlled by Wall Street investors.

Essentially, the purpose of going public is to raise capital and Snap has a lot of expenses. Snap spends millions of dollars running their business. The company has a $1 billion contract with Amazon and a $2 billion contract with Google that will be paid out over the course of five years. Snap is also actively acquiring companies. In fact, last year Snap obtained an augmented reality company.

But the biggest question following Snap’s IPO is whether the company can make capital and advertisers receive a return on their investment by using Snap’s advertising products.