Snap (NYSE: SNAP) just went public in a HUGE IPO.
The stock rocketed higher by 44%, blowing past even the most optimistic expectations.
The Snap IPO is a big deal for three main reasons:
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1) It’s the Biggest IPO in Years
Snap was the biggest IPO since Alibaba (NASDAQ: BABA) in 2014. And it was the largest U.S. technology stock IPO since Facebook (NYSE: FB) premiered in 2012.
Snap raised nearly $2.5 billion from investors in the IPO. Based upon yesterday’s closing price, the company now has a $33 billion valuation.
Based upon that valuation, Snap is worth more than Target ($33 billion), CBS ($30 billion), American Airlines ($24 billion) and Best Buy ($13 billion).
2) The Price of Snap Shares Surged
Underwriters Morgan Stanley and Goldman Sachs priced SNAP IPO shares at $17. Based upon strong demand from investors, the IPO priced above the predicted range of $14 to $16 per share.
SNAP shares opened for trading at 11:19 a.m. at a price of $24. Shares traded as high as $26.05, before closing the day at $24.48.
The 44% first-day gain for the stock was impressive ̶ making it the best-performing IPO in 2017. That initial gain was also better than the first-day performance of Facebook, Alibaba and Google.
This makes SNAP the best-performing IPO since LendingTree (NASDAQ: TREE), which jumped 56% in its first day of trading.
The higher pricing ̶ and jump in the share price ̶ shows that there is currently high demand for growth stocks. Investors are ready for more IPOs right now.
3) Get Ready for MANY More IPOs
Snap’s IPO could spark a rush of new IPOs in 2017. Why?
The Wall Street Journal reports that there are 154 pre-IPO deals waiting to go public. These are privately held companies that are valued at more than $1 billion.
Based on Snap’s impressive first day of trading, many of these companies will rush to get their shares public
With the Dow crossing 21,000 for the first time, investor sentiment is running high. And nobody knows WHEN the current bull market will come screeching to a stop.
The bull market can’t continue forever. As a result, late-stage companies with venture capital financing may choose to IPO sooner rather than later.
Jeff Thomas is the guy who LEADS tech stock IPOs for NASDAQ. And he recently told us:
“Right now, we’re incredibly busy talking to a lot of companies planning offerings. There is a lot of pent-up supply. We expect a good year.”
The very successful IPO of Snap could help improve the appetite for IPOs in 2017. Very few companies have gone public in the last two years. And Snap’s successful offering could spark a wave of new offerings.
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