March 1, 2017 – Snap Inc, owner of popular messaging app Snapchat, will price its initial public offering after the U.S. stock market closes later today in the most eagerly awaited technology IPO since Chinese e-commerce giant Alibaba went public in 2014.
The pricing will be the first test of investor appetite for a social-media app beloved by teenagers and 20-somethings but which has yet to turn a profit. The company’s losses widened last year, and it is experiencing decelerating user growth in the face of intense competition from larger rivals such as Facebook.
Despite the challenges in converting “cool” into cash, Snap is targeting a valuation of between US$19.5 billion and US$22.3 billion from listing on the New York Stock Exchange on Thursday, the richest valuation in a U.S. tech IPO since Facebook in 2012.
Snap is looking to price 200 million shares this evening at a range of US$14 to US$16 dollars a share.
The sale, which aims to raise around US$3 billion, has the advantage of favorable timing. The market for technology IPOs hit the brakes in 2016, the slowest year for such launches since 2008, and investors are keen for fresh opportunities.
A successful launch could encourage debuts by other unicorns, the moniker given to tech start-ups with private valuations of US$1 billion or more.
Early indications for selling shareholders and the company have been positive. The IPO book is said to be over-subscribed with orders coming in at the high end of the range or higher. At least one new investor indicated it was willing to buy a large chunk of the IPO and not sell it for a year, a rare commitment to make.
The company cut its price range last month from an original target of between US$19.5 billion and US$22.3 billion after investor concern over its unproven business model. It had been valued at up to US$20 billion in nine separate private funding rounds over the past five years.