Snap, a US-based social media company backed by several internet companies, last night priced 200 million shares at $17 each and raised $3.4bn in its flotation on the New York Stock Exchange, according to Reuters.
The initial public offering values Snap at approximately $24bn – putting the offering above the targeted range of $14 to $16 a share, which would have valued the company at $19.5bn to $22.3bn.
Snap was valued at almost 60 times its revenue, more than double the 27 times that social media company Facebook secured in 2012 – despite its losses increasing by 38% last year.
The book was oversubscribed and Snap could have sold shares for as much as $19 but decided against it in a strategic move to attract mutual funds as long-term investors.
The new shares, in an unprecedented move, do not give investors voting power. Evan Spiegel and Robert Murphy, the co-founders of Snap, will gain 10 votes for each of their shares while existing external investors will have one vote per share.
A previous filing revealed the IPO’s 26 underwriters have been granted 30-day option to purchase an additional 30 million shares, which could boost the size of the offering by $510m.
Snap, founded in 2011, operates an ephemeral photo and video messaging app dubbed Snapchat. It has also introduced a produced dubbed Spectacles, glasses that let the user take photographs, and has been working on an action camera and a drone – though neither of the latter has yet materialised.
The company obtained approximately $2.6bn in funding ahead of its flotation. Internet companies Tencent, Alibaba and Yahoo, which invested in individual rounds between 2013 and May 2016, do not have stakes of more than 5%.
VC firm Benchmark Capital holds 12.7%, making it Snap’s largest external stakeholder, and said it was going to sell nearly 10.7 million shares in the offering, reducing its share to 8.2%.
Lightspeed Venture Partners will sell about 4.6 million shares, General Catalyst Partners 570,000, Technology Opportunity Partners 365,000 and SV Angel 100,000. Spiegel and Murphy will each divest 16 million shares, netting them $272m each.
Snap’s other external investors will sell a total of 5.5 million shares in the offering, though the latest filing (dated February 24th) did not give details of individual amounts. The shares sold represent more than half of class A and B shares jointly held by those backers.