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Snapchat Floats on the NYSE

After refusing an offer from Facebook to buy the company in late 2013, Snap Inc, the owner of Snapchat, floated on the New York stock exchange last week. In doing so, it raised $29 billion in market capital, making it the biggest Initial Public Offering (IPO) since Facebook’s 2012 listing. As most of us will know, Snap Inc is a tech-based company focusing on creating a messaging app for videos and pictures, that are sent to other users to appear for a short period of up to ten seconds before vanishing. As a result of the company’s IPO, its owners, Evan Spiegal and Bobby Murphy, are now billionaires at the mere age of 26 and 28, respectively.

Despite the $514 million loss on the company’s books, investors have still chosen to put their money into it. Perhaps the most controversial aspect of this IPO is that there are no voting rights attached to the shares, meaning Spiegal and Murphy will retain ultimate control. This form of listing is unusual as corporate governance usually provides for shareholders to have a say in the direction of the company through voting powers. As stated by Nils Pratley, this “would surely be cold-shouldered if it was attempted in the UK“. We are yet to know whether investors have made the right decision. The question is: will Snapchat become a fierce competitor to Facebook, or will it just dwindle like Twitter?

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