Snap Inc.’s highly-anticipated IPO is due to take place at New York Stock Exchange on Thursday, March 2, 2017. Pricing its shares between $14 and $16, the company will sell 200 million shares raising as much as $3.7 billion. If everything goes in line with the company’s expectations, Snap Inc evaluation will go up to$18.5-$22.2 billion, making it the biggest tech IPO since Alibaba in 2014. If are new to the investment world and wonder how you can buy Snapchat IPO shares, here’s how it works.
Snap Inc. will officially price its shares on March 1 once the U.S. stock market closes at 4pm EST. Investors will then be able to buy Snapchat IPO shares under the name “SNAP” on March 2 on the NYSE.
Snapchat IPO shares
Snap Inc. stock will have three common stock classes: Class A, Class B, and Class C. The company’s CEO Evan Spiegel and co-founder and CTO Rob Murphy each own 21.8% of Snapchat Class A stock making it a total of 43.6%. The company will be selling 145 million to 175 million of its shares, with 1.2 billion shares outstanding. What’s important is that retail investors will only be able to purchase Class A Snapchat shares, which do not grant investors any voting rights.
That’s right: Snap isn’t giving shareholders voting power. Moreover, the IPO filing says that even if Evan Spiegel or Rob Murphy leave the company, they may still be able to retain control of the company. According to Fortune, no other company has gone public with non-voting stock on a U.S. exchange.
Who runs the show
IPOs generally involve one or more investment banks that are called “underwriters“. In preparation to the IPO, the “issuer” (in this case it’s Snap Inc), enters into a contract with a lead underwriter to sell its shares to the public. The underwriters then approaches investors who are interested in buying the shares.
It has been confirmed that Goldman Sachs Group Inc. will be overseeing Snap Inc.’s first hours of trading as a public company as a “syndicate trading manager” (also known as the “stabilization agent” for the early trades). It’s an exclusive position that gives Goldman Sachs responsibility to oversee first-price setting and manage the additional shares available to underwriters.
Goldman Sachs is also Snap Inc. IPO’s lead underwriter, alongside Morgan Stanley. The full list of underwriters includes Morgan Stanley, Goldman Sachs, JPMorgan Chase & Co., Deutsche Bank AG, Barclays Plc, Credit Suisse Group AG and Allen & Co., according to the Snap Inc. IPO prospectus.
How to buy Snapchat IPO Shares
You can buy the stock before underwriting brokers sets the opening price. That is, if you are a professional investor or have a special relationship with management and if you intend to invest millions of dollars. If you are indeed a professional investor, you already know the drill. If you are new to the trading world, read on.
After the underwriters set the first price to the stock, they begin trading on the open market. That’s when individuals and professional investors can buy the stock. If you want to buy Snapchat IPO shares, you must work with a registered stockbroker. Once you wire funds to your brokerage account, you will be able to either call your broker or go online and purchase the amount of shares you want. You will then receive a virtual certificate for the amount of Snap Inc shares you now own.
Once the Snap Inc. IPO stock has begun trading, one can buy or sell it just as any other stock in the “aftermarket”. According to Bloomberg, the odds that your tech IPO shares will appreciate are 50:50.
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