Bizarre filing and no voting rights for shareholders means that Snap has a ghost of a chance of making sure $24bn valuation does not disappear.
Snapchat owner Snap raised $3.4bn in its IPO yesterday, which is more than it had sought.
The IPO values the company at $24bn, the biggest tech company IPO valuation since Facebook listed in 2012.
Last night, Snap priced 200m shares at $17 a pop, above the initial $14 to $16 initial range, under the symbol ‘SNAP’.
However, maintaining this trajectory may prove something of a challenge as bizarre decisions made in the company’s SEC filing are already causing a stir.
For example, the IPO shares will give investors no voting rights, which is unprecedented to say the least, giving Snap’s founders and early investors complete control of the company.
Now you see it …
On the face of it, the IPO has been a screaming success, but how long investors will feel good about being powerless is another matter.
Another unusual admission in the filing is that Snap doesn’t have a single designated headquarters in LA, instead relying on a number of offices dispersed through the city.
“This diffuse structure may prevent us from fostering positive employee morale and encouraging social interaction among our employees and different business units,” Snap admitted candidly.
This could also make the company “unable to adequately oversee employees and business functions”.
In a profile of CEO Evan Spiegel, The Wall Street Journal indicated that there may be a method to his madness.
In IPO filings, companies are urged to be brutally honest, and the current velocity of Snap’s rise clearly gives investors who want to be in on the action little cause for concern.
Either way, fortune favours the brave and the high valuation and investor sentiment still bode well for the company.
It is also hoped that the success of Snap’s IPO could awaken the dormant tech IPO market.
When Facebook floated in 2012, it was regarded as almost the worst-performing IPO in years, running the gauntlet of class action suits. It was only after proving it had mastered mobile in recent years that Facebook stock really achieved its potential.
Snap is on a trajectory that matters to shareholders, with its 161m daily users and a 500pc increase in revenues of $404m.
The ultimate question for shareholders is when can they expect a dividend on their investment.
Time, as always, will tell.