Social Media

Snap’s high-priced IPO rakes in cash for big acquisitions


Most of Snap’s top products came from acquisitions, and now it will have the war chest to make more. Yet it didn’t have to blow its momentum to collect this cash. After pricing its IPO at $17, above its original $14 to $16 range, today its shares popped over 40 percent to start trading at $24. That means it pocketed $3.4 billion while still looking cool and confident on the public markets.

Sure, the 40 percent pop means it could have priced even higher. A huge windfall of nearly a billion dollars will go to its IPO underwriters — the big banks like Goldman Sachs that pre-bought Snap’s shares. But having its stock’s price go up on Day One is critical to the company’s brand that hinges on being trendy.

Now that it’s public, Snap can refocus on advancing its product, which it’s repeatedly done successfully through acquisitions. The most well-known Snapchat feature, its selfie Lenses that let you puke rainbows or look like a puppy, came out of an acquisition.

Snap acquired Looksery (left) to power its selfie Lenses (right)

Snap acquired Looksery (left) to power its selfie Lenses (right)

Here’s a look at the companies Snap has bought and what they turned into:

  • AddLive, a live video API, became Snapchat’s real-time video calling feature in chat
  • Vergence Labs, a camera sunglasses maker, became Snap’s Spectacles
  • Scan, a QR code developer, became Snap’s QR Snapcodes you can scan to follow people
  • Looksery, an augmented reality selfie mask app, became Snapchat’s iconic selfie Lenses
  • Bitstrips, makers of Bitmoji avatars, became Snapchat’s personalized stickers that look like you
  • Obvious Engineering, makers of computer vision apps, likely contributed to its World Lenses
  • Vurb, the mobile search app, powered Snapchat’s new search and navigation features
  • Flite, the creative-focused ad platform, boosted Snapchat’s interactive ad games
  • Cimagine Media, the AR e-commerce startup, could add virtual objects into your Snaps

While Snap doesn’t have the cash to buy out other tech giants, like when Facebook paid $19 billion for WhatsApp, it has enough money to make more pioneering technology purchases.

One potential target could be Snow, the Snapchat of Asia. It reported has 50 million monthly users…and Snapchat desperately needs more users right now after Instagram’s popular Stories clone led to an 82 percent decline in Snapchat’s growth.

Now that it’s gone public, some of the upside to joining the company won’t be there any more. But between Snap’s newfound prestige, IPO piggy bank and past success turning acquisitions into beloved products, it could become an even more powerful player in the M&A scene.


Source link