Snapchat IPO This week, Spiegel met with institutional investors to iron out the details of the Snapchat IPO. No doubt the goal is to have Snapchat stock oversubscribed before finalizing the deal, which shouldn’t be a problem considering the company’s spectacular momentum.
Morgan Stanley (NYSE:MS) and Goldman Sachs Group Inc (NYSE:GS) are leading the deal, with JPMorgan Chase & Co. (NYSE:JPM), Deutsche Bank AG (NYSE:DB), Allen & Co. LLP, Barclays Plc, and Credit Suisse Group AG, providing back-up. (Source: “Evan Spiegel is selling his vision to investors ahead of Snap’s huge IPO,” Business Insider, January 13, 2017.)
Although we are bullish on Snapchat stock, it is generally advisable not to trade in the early hours of an initial public offering. Many institutional investors get early access to the shares only to dump them as retail investors jump in. That way they make a quick buck.
Moreover, the venture capital investors who gave Snapchat their startup funds may cash out after the IPO. They need that capital to fund other startups because, well, that’s how their business works.
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