With influx of IPO cash, what is Snap's next move?

With influx of IPO cash, what is Snap's next move?

(NYSE:SNAP), the parent company of Snapchat, had a very successful IPO with the shares rising nearly 60% from its issue price of $17. So far, the Snap Inc. has just released sunglasses with built-in camera, the Spectacles, to showcase as "cameras."Snap will start trading on the stock market Thursday, presenting the future prospects for investors". If you didn't understand Snap's potential it was because you were too old to get what young people saw in the platform.

In their reports, the analysts rehashed some of the concerns that were voiced prior to Snap's soaring debut: The company's user growth has slowed and it lacks profits.

Fresh off its 44% one-day surge last Thursday, Snap's true valuation has now become a major question mark, given that the company is projected to lose money for the next several years.

But it turns out some of the company's new investors may be as fleeting as the messages that users share on the app. The valuation of high growth companies is intrinsically hard and they are highly risky investments by their very nature. Snap controversially made a decision to not allow people buying shares to have voting rights in the company.

Will Snap Follow Facebook's Footsteps Or Twitter's? The IPO was priced at $17 a share. In 2016, Snap's daily active users (DAUs) grew 7 percent during the third quarter, while only rising 3 percent in the fourth.

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"Although other US -based companies have publicly traded classes of non-voting stock, to our knowledge, no other company has completed an initial public offering of non-voting stock on a USA stock exchange", the filing said. If SNAP fails to monetize the users on snapchat, most of the value of SNAP will be eroded.

Facebook launched Instagram Stories last August, a near copycat of Snapchat Stories that allows users to post photos and videos lasting for up to 24 hours. In an unprecedented decision for a US IPO - something Snap acknowledged in its prospectus - shares bought in the offering will not carry voting rights over the company's decision making.

Meanwhile, Snap's IPO has been a success make no mistake. But today, amid disappointing revenue and slow customer growth, Twitter trades at $15 a share.

Analytics firm AppDynamics filed for an IPO at the end of previous year - but canceled the IPO and sold itself in January to Cisco for $3.7 billion instead.

Susquehanna analyst Shyam Patil believes that while early interest could take SNAP stock to High 20's or low 30's, the long term looks bleak given the strong competition from Facebook (NASDAQ:FB).