Skip to main content

Snapchat made people a lot of money today

A company that lost $515 million last year is valued at more than $30 billion.
  • Author:
  • Updated:

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.

Next Up

Hopkins Basketball

Hopkins suffers rare loss to No. 1 ranked Sidwell Friends

The Royals held their own in a battle of the nation's best.

argue-wertman booking photos

Charges: 2 teens responsible for violent carjacking spree across Twin Cities

They face a combined 31 felony counts, all tied to carjackings and related crimes.

rep nolan west mn house

MN rep. says he was 'assaulted' at activist group's public meeting

The Republican said a man grabbed his arms and yanked him from the room.

Screen Shot 2022-01-20 at 12.56.52 PM

What were the 'bizarre things' seen in Minnesota's sky?

The mysterious streaks were not UFOs and they weren't pieces of an asteroid.

icicles, freezing weather, cold weather

Booming noises in the night could be frost quakes

The loud sounds are most likely to happen during the middle of the night.

coronavirus, coronavirus test, covid-19

Free COVID testing site to open in St. Paul for 3 weeks

The federal testing site comes as demand for testing remains high.

Reyel Simmons photo 1 - complaint - crop

MN TikToker accused of faking federal agent life pleads guilty

He told his 10,000 followers he was a Homeland Security agent — authorities say it was a lie.


Report: Vikings request second interview with 2 GM candidates

Ryan Poles of the Chiefs and Kwesi Adofo-Mensah of the Browns.

Amaya Battle

Hopkins takes on No. 1 team in the country on ESPNU Friday

The game will feature a pair of top recruits in the Class of 2022.

st. paul federation of educators - teachers

Educators in Minneapolis, St. Paul could strike amid contract negotiations

Teachers and support staff are demanding smaller class sizes, mental health support and better pay.

turtinen two harbors

MN mayor in hot water for hawking $400M underwater hotel plan

The city council called a special meeting to discuss the mayor's public comments.


Instagram is getting more Snapchat-y again

Want Instagram to be more like Snapchat? Well, good news.

Snapchat's going to have $130 video camera sunglasses

Snapchat's new sunglasses will record and save "Memories" straight to the app.

Facebook blames a 'tiny group' of users for lots of obnoxious spam

Here's what Facebook says it's doing so you see it less.

Facebook blames a 'tiny group' of users for lots of obnoxious spam

Here's what Facebook says it's doing so you see it less.

How to make sure you can't be stalked on the Snapchat map

How to turn off the map setting that lets people see exactly where you are.

How to make sure you can't be stalked on the Snapchat map

How to turn off the map setting that lets people see exactly where you are.