What is Snapchat?
Snapchat, one of the most popular messaging and social media apps on the market today, humbly began as a class project by former Stanford University students Evan Spiegel (now CEO), Reggie Brown, and Bobby Murphy.
What Makes Snapchat So Popular?
You know you’re doing something right when huge tech corporations begin copying all of your ideas.
Giants like Facebook (FB – Free Report) and Microsoft (MSFT – Free Report) have spent the better part of four years trying to emulate Snapchat, debuting new tools and features that are shamelessly similar to what the startup is known for.
Robinhood APP - SNAPCHAT IPO - How to BUY SNAPCHAT! But Should YOU??
It’s here! The much-anticipated Snap IPO is happening.
They priced their IPO today at $17 per share, raising $3.4 billion and valuing the company at $24 billion. Like venture rounds, IPOs are fundraising events, yet instead of private investors buying the shares, it’s stock market investors.
But there’s a catch.
If you’re an ordinary “retail” investor, you probably won’t get to buy Snapchat at $17.
The IPO process favors large institutional investors and ultra-wealthy individuals who are on friendly terms with the banks. No one said it was democratic!
(They get first dibs because they are supposedly more likely to hold onto shares longer, and there’s an effort to keep the stock price stable).
Everybody else gets to buy shares when it first starts trading, which will happen after Thursday’s opening bell. Generally, this price is higher than where they priced the offering.
That means that retail investors don’t reap all the gains in the “pop,” the term for the rise on the first day of trading.
Most companies go up in their debut and that’s on purpose.
While Snapchat is incentivized to make as much as money as possible on the shares it sells, it also wants to make a good first impression on the public. Many companies aim for at least a 20% gain by the close of the first day of trading.