Snap brushes off investor skepticism on 2nd day of IPO roadshow

Snap brushes off investor skepticism on 2nd day of IPO roadshow

Snap brushes off investor skepticism on 2nd day of IPO roadshow. (Reuters) – Snap, owner of popular messaging app Snapchat, fended off investor skepticism on the second day of its IPO roadshow on Tuesday, betting on the charisma of CEO Evan Spiegel, 26, whom it introduced as a “once in a generation founder.” Snap is targeting a valuation of between $19.5 billion and $22.3 billion from listing on the New York Stock Exchange in two weeks. In the Q&A with management that took up the entire session, not one attendee asked about the company’s first-of-its kind share structure that offers IPO investors no voting rights. Investors were wary that being too critical might prompt the company to limit their allocation in the offering, an investor said. Spiegel and co-founder Bobby Murphy will have the right to 10 votes for every share, and existing investors such as venture capital backers will get one vote for each share. Investors seeking clear answers to concerns around metrics, particularly the company’s long-touted new user growth, were disappointed. Last year, Facebook introduced disappearing videos to its Instagram platform that resemble Snapchat’s. Spiegel said the company’s growth is “lumpy,” due to new launches that have varying degrees of success. Chief Strategy Officer Imran Khan asked investors to gauge how much users engaged by looking at Snap’s cost of revenue. This is based on how often users engage with the app and the types of features they use.

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An investor departs the Mandarin Oriental hotel holding a pamphlet of information on investing in the upcoming IPO of Snap Inc in New York, U.S., February 21, 2017.
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An investor departs the Mandarin Oriental hotel holding a pamphlet of information on investing in the upcoming IPO of Snap Inc in New York, U.S., February 21, 2017.

(Reuters) – Snap, owner of popular messaging app Snapchat, fended off investor skepticism on the second day of its IPO roadshow on Tuesday, betting on the charisma of CEO Evan Spiegel, 26, whom it introduced as a “once in a generation founder.”

Snap is targeting a valuation of between $19.5 billion and $22.3 billion from listing on the New York Stock Exchange in two weeks. It cut its initial target of $20 billion-$25 billion last week following negative investor feedback.

In a room of more than 400 investors on the 36th floor of New York’s Mandarin Oriental Hotel, Spiegel brushed aside concerns of slowing user growth and stressed Snap’s potential to change “the way people live and communicate,” according to sources who asked not to be identified because the meeting was closed to the press.

Many investors remained unconvinced by Snap’s claim that it is more valuable than Facebook based on revenue at the time of its IPO in 2012. Still, they acknowledged that Snap has built momentum as this year’s biggest technology IPO and the darling…

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