Snap raises $3.4bn in biggest tech float since Facebook
Snap raised $3.4bn (£2.8bn) amidst strong demand for shares in a New York float that gives it the biggest tech valuation since Facebook.
The owner of popular messaging app Snapchat is now valued at $24bn, higher than the $22.3bn expected, Reuters reported.
Snap sold 200 million shares at $17 per share, above the range it had targeted of $14 to $16 dollars a share.
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Snap had originally aimed to raise $3bn – the same amount Facebook offered the disappearing messaging for the whole company in 2013.
Snap's valuation has almost tripled within three years, after Snapchat (its previous corporate trading name) held a funding round in 2014 that valued the company behind Snapchat at $10bn (£8.13bn).
However, despite the surging valuation, Snap ran a net loss of $514m in 2016, and some investors are sceptical about new attempts to move into hardware.
Snap proudly describes itself as "a camera company" on its website, and says its task is no less than "reinventing the camera".
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Michael Hewson, chief market analyst at CMC Markets, said: "The valuation of up to $25bn in itself isn’t a particularly instructive number when it comes to the success of an idea as Twitter will no doubt testify, which means the company will need to be creative about how it monetises its growing user base.
"While Snap would like you to think it is a camera company, the only camera it has is its wireless 'Spectacles' which record 10 to 30 seconds of video, and send it to the app on your phone and which cost about $130. Unfortunately for Snap the costs of making them currently come in higher than that."
Snap's future profitability will likely rely on its ability to position itself as an advertiser on a par with Facebook or Google.
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Analysts at Enders Analysis question its long-term strategy: "The company hopes to capture the large brand advertising budgets it expects will leave TV as linear viewing declines. But how it plans to do so is unclear, as it has shown little interest in connected TVs, and the ad model for augmented reality – Snap’s focus – is a long way off."
British steel billionaire Lakshmi Mittal's son in law was one of the investors keen to get his hands on Snap's stock, in one of the most hyped initial public offerings since Chinese website Alibaba listed in 2014.