Last week, Snap Inc., the parent company of Snapchat, revealed its initial public offering (IPO). This means that the company made its shares available to investors through the stock market, and it can now be publicly traded.
Snap, according to most recent reports, is hoping to raise about $3 billion in the offering. That equates to 200 million shares, with the share price in the $14 to $16 range.
At that price, Snapchat would have a relatively small IPO in comparison to a company like Facebook — about the size of Google’s IPO back in 2004.
If you’re an investor who follows the market closely, you might be thinking about Snap’s IPO and wondering if it’s a good investment.
According to my sources, Snap is oversubscribed. In Wall Street lingo, that means that investment banks have found buyers who, at this point, are committed to buying all of the shares of Snap in the IPO.
That’s typically a good sign because it means that the shares are in high demand. The people at big-money management firms believe that the company has a business that’s capable of growing.
But, as you can see from the chart above, not all hot and highly publicized IPOs work out. Some flame out, like Groupon, while others soar, like Google and Facebook.
Only time will tell how successful Snap’s IPO will be.
Editor, Profits Unlimited