Snap, the parent company of Snapchat, debuted on the New York Stock Exchange with a market value of $24bn, making it the largest US tech flotation since Facebook. Despite Snap’s substantial losses and slowing user growth, investors were drawn to its strong hold on young audiences and its potential for advertising revenue. Its shares surged more than 40% on its first day of trading, closing at $24.48.
This flotation is seen as a test for other tech companies considering going public, including Uber and Airbnb. It could also encourage more tech start-ups to opt for an initial public offering (IPO) rather than selling to larger companies.
However, some analysts have expressed concerns about Snap’s valuation, given its lack of profitability and the fact that its shares come with no voting rights. Critics argue that Snap’s structure gives too much power to its founders and could set a worrying precedent for future tech IPOs.
In response, Snap has defended its decision, arguing that it will allow the company to take a long-term strategic view. It has also promised to develop new products and features to attract users and advertisers.
Despite these assurances, the question remains whether Snap can successfully monetise its user base and compete with larger rivals like Facebook and Google in the digital advertising market.
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