2017-03-01 16:47:07
Snap Prices I.P.O. at $17 a Share, Valuing Company at $24 Billion

A loss of more than $500 million last year. A company whose co-founders can, in effect, keep control for years after leaving. And once-explosive user growth that appears to have hit a speed bump.

For many investors in Snapchat’s parent company, none of this will matter much, at least at first.

On Wednesday, shares of Snap Inc. were priced at $17 — higher than the expected price range of $14 to $16 — indicating strong demand among investors. The price values the California company at $24 billion. Snap’s shares are set to trade on the New York Stock Exchange on Thursday.

The question beyond this week is whether the disappearing-messages company will prove to be like Facebook — or embattled Twitter.

Snap’s offering will be one of the biggest and highest-profile market debuts of recent years, raising billions of dollars, giving lift to a moribund market in new stocks and minting paper wealth for its top investors.

Perhaps more important, it will cement Snap’s status as one of the newest members of a rarefied club of late: those unicorns, or start-ups valued at more than $1 billion by private investors, that have successfully jumped to the public markets.

In going public, Snap has leapt ahead of other technology darlings like Uber, Airbnb and the data-analysis provider Palantir.

Demand among investors for shares in Snap, coming after a nearly two-week road show that spanned the country and stretched to London, proved robust.

But with an expected market value of well past $20 billion, the company is now setting itself up with little room for error. Its valuation is far richer than that of Facebook, which earned $10 billion last year. By comparison, Snap lost $514 million during that same time, an amount that swelled from 2015.

Yet throughout presentations to investors, Snap executives and their advisers kept the emphasis squarely on the promise of what first seemed like a technological lark. Instead of focusing on the core product of disappearing messages, Snapchat instead represents a new way of consuming content, largely produced by its users — laid alongside a fast-growing advertising business.

As of the end of the year, Snap reported an average of 158 million active daily users. Revenue totaled about $404 million in 2016, up from zero in sales three years ago, and the company said it believed it could reach $1 billion this year.

The company has come a long way from its beginnings in a Stanford dorm room as a service used largely by millennials enamored with sending their friends pictures and video that self-destructed after seconds.

Based in the fashionable Los Angeles neighborhood of Venice, the company has since introduced ways for users to broadcast “stories” about their days to wider audiences, and pioneered the use of computer-generated lenses that transform those users into dogs or tacos.

Now, Snap is trying to convey even greater ambitions.

In the prospectus for its stock sale, the service declared itself a “camera company.” So far that has included selling Spectacles, camera-equipped sunglasses that let users upload 10-second videos directly to Snapchat that briefly captured the fancy of the tech cognoscenti. And still more products could be at work within the often-secretive confines of the company’s offices.

Snap’s co-founder and chief executive, Evan Spiegel, has played down comparisons to Mark Zuckerberg, and the 26-year-old has assiduously painted an image of himself — a fashion aficionado with a supermodel fiancée — that is different from the Facebook billionaire.

But Mr. Spiegel and his fellow shareholders are still hoping that investors will buoy their company to Facebook-type heights. Since Mr. Zuckerberg took his business public just under five years ago, Facebook’s shares have climbed over 254 percent.

The cautionary tale is that of Twitter, which celebrated a lofty stock market debut in 2013, only to see its share price tumble amid questions about its ability to grow. Twitter’s stock is down roughly 62 percent from its I.P.O., and the company has had to fend off questions about whether it could remain an independent and publicly traded business.

Analysts also raised the specter of lower growth with Snap as well, given that the company’s user growth slowed last year.

Executives contended during the investor presentations that the slowdown arose largely because of technical issues with its Android app. And they argued that the bigger issue to look at was engagement. Or, put another way, how much its audience loves the app: Daily active users opened Snapchat on average more than 18 times each day.

Whether Snap floats or sinks, its offering will have already significantly enriched its earliest investors, notably co-founders Mr. Spiegel and Robert Murphy. With 227 million shares each, the two men are worth more than $3 billion each on paper, well ahead of their 30th birthdays.