Continue Reading Below
Shares of Snapchat operator Snap (NYSE: SNAP) have soared on its first day of public trading, up by 46% relative to the $17 initial public offering (IPO) price as of 3:10 pm. EST.
Snap is easily the biggest IPO in years, particularly within the nascent investable social media sector. There has been considerable hype and excitement around Snap's public debut, given the company's incredible popularity among teens and millennials alike.
Image source: Snap.
For much of the past few months, Snap has been drumming up investor interest with its IPO roadshow, which was critical in balancing investor demand with the optics of delivering a strong first-day pop, which IPOs are often judged by. The gains today show that Snap indeed did a good job balancing these forces.
Jumping on the first day of public trading may be viewed as a success for the offering, but the real question for investors will be if Snap can live up to the lofty expectations currently being priced into the stock. Investors purchasing shares today know -- or at least should know -- that they will be receiving absolutely no voting rights, Snap is already on the hook for billions of dollars of cloud infrastructure spending, and the company is already seeing daily active user growth decelerate meaningfully. While first-day pops are common, what's also common is for the market to sober up following the post-IPO honeymoon as financial reality sets in. Snap will have to prove that it can grow its ad business and live up to the "camera company" identity that it is pitching, neither of which will be easy in the years ahead.
10 stocks we like better than Snap Inc.When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Snap Inc. wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of February 6, 2017