NEW YORK • Snap shares ended up 44 per cent on their first day of trading as investors flocked to buy into the hottest technology stock offering in three years, overcoming doubts about the loss-making messaging app company's slowing user growth.
The stock closed at US$24.48 on the New York Stock Exchange on Thursday, well above the initial public offering price of US$17 per share on Wednesday, giving the company a market value of US$28.3 billion, on a par with CBS and Target. At one point, the stock hit a high of US$26.05 and a market value of US$29.1 billion (S$41 billion).
The owner of Snapchat, an app popular with young people for its disappearing messages, raised US$3.4 billion in its initial public offering on Wednesday, more than the US$3 billion Facebook offered to pay for the company in 2013.
With a full greenshoe option to issue more shares likely to be exercised, the company is poised to increase its deal size to US$3.9 billion.
That makes it the biggest United States technology IPO since Alibaba Group Holding in 2014, despite the fact that Snap has never made a profit. The IPO has tested investor appetite for a social media app that is popular among people under 30, but has yet to convert the cool factor into cash.
Despite a nearly seven-fold increase in revenue, Snap's net loss widened 38 per cent last year to US$514.6 million. It faces intense competition from larger rivals such as Facebook's Instagram as it grapples with decelerating user growth.
Snap's offering was well timed, with investors clamouring for fresh opportunities after 2016 marked the slowest year for tech IPOs since 2008.
The broader market has also been buoyed after the election of US President Donald Trump. The S&P 500, Dow Jones Industrial Average and Nasdaq Composite all hit record highs on Wednesday.