Snap Inc., parent company of the popular Snapchat app, seemed poised to take the stock market by storm. Just one day after its $3.4 billion IPO at $17 per share, the company was listed on the New York Exchange where its stock price exceeded expectations, shooting up to $24. Add to that a cash infusion by NBC Universal to the tune of half a billion dollars, and the initial enthusiasm regarding this newest addition to the social media scene becomes understandable.
As was reported last week in the Jewish Voice, Snap offered 200 million Class A shares, which do not include voting rights. The company, not wishing to dilute its power in decision making, has set up a three tier share structure. Class B shares carry one vote for each share. Founders Evan Spigel and Bobby Murphy will have the maximum voting rights with ownership of Class C shares, which carry 10 votes for each share.
But after a brief honeymoon period, the company's stock price dipped back down below $20 last week amid concerns over its unproven business model (viewed by investors as experimental), and largely untested corporate leadership—company co-founder and CEO Evan Spiegel is just 26 years old.
Snap might not be sunk just yet, however. The company is now being evaluated by a dozen different bank analysts, and got a 3.5% boost Monday morning when it received its first “buy” rating. Monness Crespi Hardt recommended the stock to its investors, with a price target of $25. That recommendation wasn't without some reservations, with analyst James Cakmak cited in the New York Post as saying “We recognize that we are potentially giving too much credit for unproven skills in building a business, rather than just a product.” Nonetheless, he went on to speak of the company's potential to outpace its competitors in terms of revenue growth.
Six of the analysts currently covering Snap Inc. recommend selling, five others give it a hold rating. So for the moment, Cakmak would appear to be the only pro-Snap voice among them. If the the company's revenue model proves itself viable, however, he may simply be the first of many.
By: Tyler Jacobowitz