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

Breakingviews
Rob Cox
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

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.