Snap Inc.’s massive $30 billion valuation has left experts scratching their heads.
The parent company of social messaging app Snapchat went public on the New York Stock Exchange Thursday morning with a targeted price of $17 per share, but stock opened at $24. It closed out the day at $24.51 per share, a price that many analysts say is over the top. While the $17 per share rate would have valued the company at $24 billion, the $24 per share price brings the valuation up to $30 billion.
Here is what some of the experts had to say:
“While there has been lots of excitement surrounding this IPO, we believe Snap draws eerie similarities to prior IPOs which popped and then dropped,” L&F Capital Management said in a post. “We think investors should stay away from Snap.”
“Snap Inc.’s valuation at $17 a share, or $24 billion as a business, is a stretch at best — and most likely one of the most overvalued IPOs in recent years,” Investing.com senior analyst Clement Thibault said in a note.
Pivotal Research analyst Brian Wieser expressed his skepticism: “Investors in Snap will be exposed to an upstart facing aggressive competition from much larger companies, with a core user base that is not growing by much and which is only relatively elusive. It has a promising and innovative advertising offering, but so far it is still mostly unproven and difficult to quantify its ultimate scale.”
Reuters Breakingviews’ Rob Cox had little good to say about those who bought Snap stock: “Investors have effectively just done what no self-respecting person ever should: wear sweatpants in public. With Snap’s $3.4 billion initial public offering they have simply given up giving a damn. They handed their money over to an immature company and in the process abrogated their rights to fair treatment, good governance and reasonable valuations. If the $24 billion self-styled ‘camera company’ run by a 26-year-old fails to achieve its ambitions, shareholders have only their capitulated selves to blame.”
SharesPost head of research Rohit Kulkarni said “Snap’s user growth is generally slowing down, even in newer geographies outside North America and Western Europe.”
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