A few years back, Facebook owner Mark Zuckerberg offered to buy Snapchat for $3 billion. Founders Evan Spiegel and Bobby Murphy turned it down, and now they're worth $4 billion – each.
Snapchat had its IPO (initial public offering – the first sale of stock by a company to the public) Thursday, and the markets went crazy, with the social media app's share price rocketing more than 50 percent within hours.
It meant that Snapchat at one point was worth around $36.5 billion. To put this in perspective, that's worth more than 362 other companies in the S&P 500 – a stock market index comprised of America's most valuable firms.
CNBC reports Snapchat initially offered 200 million shares at $17 each ahead of going public Thursday, but such was the huge demand some investors said they got as little as 2 percent of the shares they were asking for.
As a result of the demand, Snapchat shares opened on the New York Stock Exchange at $24, meaning those who were able to shares for $17 turned a quick 41 percent profit.
They continued to rise during the day as well, at one point topping $26, a rise of around 52 percent, before dropping back below $25 by the end of trading.
The main people to have benefited from this share price surge – other than Snapchat itself – will be institutional investors such as pension, mutual and hedge funds, high net-worth individuals and long-standing clients of banks, who were able to get the shares at $17. Forbes explains the IPO process in more detail here.
Is it Facebook or Twitter?
What's all the more remarkable about this massive valuation is that the company actually loses money.
The Daily Telegraph reports that the company lost $515 million in 2016, and since it was founded in 2011 it has racked up losses of $1.2 billion.
However, Marketing Land notes that the company is still in its infancy and revenues are expected to grow. Despite the loss last year, it still managed to generate revenues of $404.5 million, up from $58.7 million in 2015.
Nonetheless, experts are wondering whether Snapchat is going to be the next Twitter – which had a great IPO only to see shares plunge since as it struggled to turn a profit.
Or the next Facebook – which saw its shares drop more than 50 percent in the four months after its IPO but is now worth $393 billion.
Given its popularity among younger smartphone users, CNN asked analysts whether millennials should invest in Snapchat.
They suggest that the company might be overvalued to start with, meaning it might be more prudent to wait and see what happens a little further down the line.
There's also concern that the majority of its users are younger and have more quickly changing tastes, including when it comes to social media, and that users could be put off when Snapchat starts running more ads.
One of the main concerns is that at 161 million daily users, its user base is smaller than Twitter and Facebook were when they floated, and although it's still seeing a big increase in new users, it's not growing as quickly as it was.