Shares in Snap, owner of messaging app Snapchat, have begun trading on the US stock market.
In its opening minutes, its price hit $24.48 a share, a jump of about 40 per cent.
The flotation valued the company at $17 a share, or $24bn in all, although Snap has never made a profit.
The firm’s initial public offering (IPO) is the biggest for a US tech firm since Facebook in 2012 and will turn the company’s founders, Evan Spiegel and Bobby Murphy, into multi-billionaires.
Snapchat, which is especially popular with teenagers, allows users to send images and messages which then vanish.
Whenever a company prepares for its IPO, its executives head off on a roadshow – a tour of potential investors. It’s a chance to convince them of the worth of the new stock, deflecting any concerns they may have about how successful the company may be.
For Snap, its roadshow was all about telling investors that it wasn’t going to become the next Twitter, and that while it too has slowing growth, the firm retains the “cool” factor and is working on exciting new ideas to keep its audience interested, engaged and – crucially – looking at advertising.
This is a better-than-expected price, no doubt about it. But the questions is – how will Snap survive against Facebook, a company which seems intent on grabbing users by emulating its best ideas?
The company’s losses widened last year, and user growth is slowing down in the face of intense competition from larger rivals such as Facebook.
Despite the challenges in converting “cool” into cash, Snap’s valuation is the richest for a US tech flotation since Facebook in 2012.
At the beginning of February Snap’s formal announcement to regulators of its plans revealed that the company had revenue of $404m last year, but made a loss of $515m. -BBC
