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Pro Analysis

Breakingviews: Snap IPO marks moment investors gave up giving a damn

A woman wears Snapchat's Spectacles on the floor of the New York Stock Exchange during the company's initial public offering in New York, March 2, 2017.
Brendan McDermid | Reuters
A woman wears Snapchat's Spectacles on the floor of the New York Stock Exchange during the company's initial public offering in New York, March 2, 2017.

Investors have effectively just done what no self-respecting person ever should: wear sweatpants in public. With Snap's $3.4 billion initial public offering they have simply given up giving a damn. They handed their money over to an immature company and in the process abrogated their rights to fair treatment, good governance and reasonable valuations. If the $24 billion self-styled "camera company" run by a 26-year-old fails to achieve its ambitions, shareholders have only their capitulated selves to blame.

Snap founder Evan Spiegel's disappearing-message application has many things going for it. One of these attributes – its virtual inaccessibility by anyone over the age of 30 – may have helped its IPO. Few seasoned portfolio managers wagering on the maker of rainbow-vomit photo filters will have properly vetted the product, though they will have perhaps gauged its popularity by monitoring their children's mobile-data usage.

Still, there is a bull case to be made for Snap, which is why the sale of its securities (calling them shares would be a crime against the Old English etymology of the word) was 10 times oversubscribed and Morgan Stanley priced them above the range at $17 apiece. Snap has 158 million users, who check into the app, like, 18 times a day. It grew revenue almost sevenfold in 2016 to $405 million. Snap's backers hail it as the third pole to one day challenge Facebook and Alphabet in dominating the internet.