{"id":3819,"date":"2017-03-01T21:42:40","date_gmt":"2017-03-01T21:42:40","guid":{"rendered":"https:\/\/www.rsoftsolution.com\/blog\/five-burning-questions-that-snaps-ipo-is-about-to-answer.html"},"modified":"2017-03-01T21:42:40","modified_gmt":"2017-03-01T21:42:40","slug":"five-burning-questions-that-snaps-ipo-is-about-to-answer","status":"publish","type":"post","link":"https:\/\/www.rbsitsoftwaresolution.in\/blog\/five-burning-questions-that-snaps-ipo-is-about-to-answer.html","title":{"rendered":"Five burning questions that Snap\u2019s IPO is about to answer"},"content":{"rendered":"

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Snap will begin publicly trading tomorrow, which means that it will officially give a price for its shares in its initial public offering this evening.<\/p>\n

Originally setting a range between $14 and $16<\/a>, the company set its own valuation lower than what tech observers might have expected, given the hype of the first big tech IPO of 2017<\/a>. But, like all instances of these kinds of IPOs, that\u2019s expected to go up and we\u2019ll likely see where the company wants to set its own real valuation that\u2019s somewhere between giving Wall Street to align the hype and the potential of its business.<\/p>\n

More than anything else, though, it\u2019s going to give us some insight into how people are feeling about the company given the major questions that it\u2019s faced throughout its roadshow \u2014 a whirlwind trip where it pitches to bankers and retail investors as to why they should buy the stock. It\u2019s spent the past few weeks in ballrooms and hotels fielding questions and we\u2019ll see if they were actually able to quell concerns, or if that was going to affect any demand in the first place.<\/p>\n

Here are a couple of key questions that the company faced during its pitches, and where we can finally get some insight into how Wall Street and other retail investors are feeling:<\/p>\n

What\u2019s the appetite for tech IPOs?<\/strong><\/p>\n

Earlier this year, AppDynamics \u2014 a large enterprise company \u2014 was expected to go public and give us a sense of what the environment was going to be for tech IPOs in 2017. You\u2019ll hear the phrase as to whether the \u201cIPO window is open,\u201d meaning that for the moment there\u2019s appetite to buy into newly-minted public companies. It\u2019s generally the first IPO of the year that sets the stage.<\/p>\n

That data point evaporated when Cisco snapped up the company just days before it debuted publicly<\/a>, basically taking away an opportunity to gaze into the crystal ball and see whether or not people would be feeling good about buying into these companies. So now Snap is next on the list to demonstrate whether there\u2019s demand from people to buy into newer companies and start placing their bets for the long term.<\/p>\n

Snap is still a consumer tech company. So it in some ways isn\u2019t particularly helpful when setting up comparison models for enterprise companies that are more frequently the ones going public. A big and hyped IPO like Snap doesn\u2019t come around that often, but based on how oversubscribed the deal is and what the day one \u201cpop\u201d is will gauge what kind of confidence investors have in tech companies going public this year.<\/p>\n

\"snapchat-los-angeles\"<\/p>\n

Will Wall Street forgive Snap\u2019s huge costs of revenue?<\/strong><\/p>\n

Snap has signed huge contracts with Google and Amazon for their hosting services, where Snap runs its operations. These contracts were not cheap \u2014 they\u2019re in the billions of dollars \u2014 and already Snap\u2019s costs of revenue are huge. Its revenue is growing at an amazing rate, but the rate at which it\u2019s burning cash is almost equally as remarkable. It\u2019s going to be a problem as Wall Street is looking for (and rewards) a company that can be a sustainable and profitable company that can continue to grow.<\/p>\n