Snapchat, that we all recognize as the vogue social media app that revolutionized our habits of sharing pictures, has been the fad among the Social Media fanatics for quite some time now. What initially started as a sexting app, soon acquired a cult status with the youth and surged an upward trend in the play store downloads. Today, Snapchat Inc. boasts more than 158 million daily active users and grossed over $404.5 million in 2016 revenues. However, the net worth of each of the Snapchat founders has dropped by $1 billion.
At the start of this month, however, the company went public and sold over 200 million shares to raise $3.4 billion. A shot across the bow of Facebook and a potential death blow to Twitter. For Evan Spiegel and Bobby Murphy, billionaire Snapchat founders, the first two days of running a publicly traded company brought spectacular returns. The next week, gravity kicked back in.
On Thursday, March 2, Snapchat’s parent company, Snap, began trading on the New York Stock Exchange. By the end of the day, shares were up more than 40% from the company’s $17 initial public offering price. Then, on Friday, the stock rose an additional 11%, closing above $27 per share. Those gains added more than $2.1 billion apiece to the personal fortunes of Spiegel and Murphy, who together hold nearly 90% of Snap’s voting power.
Since then, the initial investment has gravitated and has drifted its course. Snap’s stock stoop down abruptly by 18% between its closing price on Friday, March 3 and the end of normal trading at 4 P.M. Eastern Time on Friday, March 10. For Spiegel and Murphy, this meant a stabbing hole in their fortunes which fell by a billion dollars each. They are now worth $4.9 billion apiece, according to FORBES’ real-time rankings of the planet’s wealthiest people. Still, The company’s future remains fraught with peril due to failure to make profits and what is now an overpriced stock.
Despite the downfall, both the co-founders sit in a comfortable spot. Spiegel, 26, and Murphy, 28, are now two of just four self-made billionaires under the age of 30. Spiegel is the world’s second youngest self-made billionaire; only fellow 26-year-old Stripe co-founder John Collison, whose birthday is two months later, ranks ahead of him.
Even with such impressive numbers, many investors question Snap’s current market value. User growth has relaxed considerably of late as rivals Instagram and Whatsapp have introduced their own photo story features (A courtesy by Mark Zuckerberg). Additionally, the business is still operating at a heavy loss. At present, not one analyst will recommend buying Snap shares. Should the stock’s downward trend continue, Snapchat founders will be in for a turbulent ride.
Like us on Facebook. 🙂