Snapchat’s parent, Snap Inc., completed the largest initial public offering in the history of Los Angeles County by raising $3.4 billion in cash on a $24 billion market valuation of the Silicon Beach company on Wednesday.
Despite concerns that enthusiasm for the Snapchat app was beginning to fade among youth, Breitbart News predicted Snap would go public at the high end of its pricing range and bank a staggering $3.2 billion in its IPO.
But in the hot stock market the day after President Trump’s pro-growth speech to a joint session of Congress, Snap was able to raise another $200 million.
What is being called the “Trump Bump” in the stock markets around the world was also supported on March 1 by a big move up in economic expectations, with the closely-watched Institute for Supply Management’s Purchasing Manager’s Index capping six straight up months, and a 1.7 point move to 57.7 in February. With a reading of 50 being neutral, the ISM’s rise represents the strongest growth reading since 2011.
The Dow Jones Industrial Average responded to all the good news by vaulting up 303 points to an all-time record high of 21,115. The index of the largest U.S. stocks also set an all-time record, with the Dow gaining over 1,000 points in just five weeks for the first time.
The Wall Street Journal reported that Snap’s lead underwriters, Morgan Stanley and Goldman Sachs, indicated that demand for shares in the IPO was oversubscribed by 1,000 percent in what is being called the hottest tech deal since the 2014 IPO of China’s Alibaba Group Holding Ltd.
The Zero Hedge blog reported yesterday that potential buyers for 25 percent of Snap’s IPO were forced to agree to a one-year “lock-up” in order to qualify to buy the IPO. The company could have priced the shares at $19, but wanted a big pop in the price when the company starts trading on the New York Stock Exchange on March 2 under the symbol “SNAP.”
Founded in early 2011 by three friends who first met in a Stanford University dorm, Snapchat was valued at $4.25 million when it received its first venture capital.
Breitbart News reported a year ago, in “Silicon Valley Unicorns Becoming Unicorpses,” that venture capital backed companies with valuations of over $1 billion were running out of cash, because of the inability to complete Wall Street IPOs without cutting their private market valuations.