Snap Inc., the parent company of Snapchat made its stock market debut last evening. The company started trading under the ticker symbol "SNAP" and immediately surged 44 percent above its offering price. Snap's IPO offering priced its shares at $17 a piece, valuing the company at $24 billion.
Snap closed the day's trading at $24.48, reaching a valuation of more than $30 billion. At one point in day's trade, Snap reached a high of $26.05 a share and low of $23.5. The IPO offering has also turned its co-founders Evan Spiegel and Bobby Murphy new billionaires under 30. According to WSJ, "Evan Spiegel, Snap’s chief executive, now owns shares worth more than $6 billion, while Chief Technology Officer Bobby Murphy’s stake is worth more than $5 billion."
While Snap may have surged in its very first day in trading, investors continue to remain skeptic about company's business model. Snapchat, the ephemeral messaging platform continues to be Snap's biggest product. The company has also expanded its product offering with the release of Spectacles.
According to regulator filing, Snapchat had a net loss of more than $500 million with a revenue of $404.5 million. The company is yet to show ways to scale its business beyond Snapchat, which itself is at the risk of losing users with rivals Facebook and Instagram copying its model.
At a valuation of over $30 billion, the company's market cap to sales ratio looks worrisome to select investors. These investors also believe that Snapchat's 158 million daily active users in the age group of 18 to 34-year-olds remain its biggest asset. Alibaba Group's 2014 IPO continues to be the biggest US listing by market value. With Snap's listing, investors hope that the company doesn't become another Twitter as its competitors continue to copy its social formula.