Snap filed to go public in early February with an estimated valuation between $19.5 billion and $22.5 billion at $14 to $15 per share then. Whatsapp’s new status update and Snap’s decision to go public were centred around the same time frame which inherently instigates space to suspect desperation on the part of Snap to keep itself running despite slackening in user growth rate.
However, the initial valuation appears to be obsolete now as Snap has recently announced an ambitious $24 billion (approximately) with a tag of $17 per share. Snap’s escalating advertising business can be counted as one of the primary players in the defence of its recent valuation. From $15 million in 2015, it has grown to a whopping $400 million in 2016 which assures investors looking at buying Snap’s stocks but may bely the future scenario due to plummeting user growth rate and new competitors in the same space.
However, there is another twist in the tale. While everyone is focused on Snap’s executives and CEO Evan Spiegel going around promoting its Snap’s stocks and addressing queries, we may accidentally overlook a significant factor which Snap has formally factored in. Non-voting shares essentially strips off the powers that an investor may enjoy as it essentially renders them puppets when it comes to the ability to influence Snap’s market model and Strategies. This fundamentally means that any fluctuation in the stock price due to some strategy employed by Snap will affect the investors but they would have no power to veto or do anything about it unless the Spiegel led team decides to do anything.
Thus, we are looking at an IPO which features non-voting shares that are heavily priced at $17 per share by a company which has recently reported plodding user growth rate. However, future is mercurial and the prospect of Snap’s growth owing to its success in the mobile advertising space may woo the investors into buying its stock.