About Snapchat IPO Price

I’ve been seeing story after story about how that piece-of-shit company SNAP is now below its IPO price. Huge publications – – hundreds of times larger than our beloved Slope – – are making hay out of this big event, with such headlines as this:

Now, there’s no reason to single out TechCrunch in particular, but I’ll do it all the same. As you can see, I’ve highlighted a particular sentence, which seems to assert, now that the closing price is below the IPO price (by all of a penny……..) that, at last, public investors at at last lost money on this. In other words, since it came public at $17, and has been trading above it ever since, everyone has been just fine and dandy until now.

OK, moving on………..

The young woman who wrote the story appears to be well-credentialed – certainly far more than me – as evidenced by her profile (and, let’s face it, her glasses):

But why… does the business press continue to press forward this canard that the “public” all bought in at the IPO price?

Let’s take the chart of SNAP as the obvious example. Here’s the chart of its entire life as a public firm:

Let’s all get this nice and perfectly clear: the IPO price doesn’t necessarily have ANYTHING to do with what the public pays. NOTHING! Nada! Zilch!

The first public investors in SNAP paid $24 per share, not $17. That was the opening price on its first day of launch. The investment banks were delighted, of course, because they were, in fact, the ones who enjoyed the $17 price (a little less, but we’ll keep this simple) and got to sell it to the public for whatever the public was willing to pay.

So SNAP had a good first day (high of $26.05) and a good second day (high of $29.44).

And that, my friends, was the end of the SNAP success story.  From then on, it sucked whale, and since that time, it has lost nearly HALF its value in a little over four months.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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