Two weeks ago, Snapchat’s newly-formed parent company Snap Inc. went public, and the IPO has been in the public eye ever since. In the most anticipated IPO since the previous most anticipated IPO, Snap went from an expected valuation of just below $20 billion to a market cap of more than $30 billion, according to the highest estimates. It’s currently trading at $20.24 per share, 19% higher than the IPO price of $17, but only the big players connected with the deal were able to buy at that price; shares closed at 24.28 the first day of the IPO and had climbed to $27.09 the next day.
Since then, Snap’s been in a fairly steady decline—not unusual for a newly public company. The fact that there are already whispers of lawsuits regarding the IPO while other say it’s one of the smoothest in recent memory is also fairly typical of the way the tech press looks at these big events. It’s either the best, most lucrative and amazing deal around, or it’s all a house of cards about to come tumbling down.
Or at least that’s how I read the headlines.
It’s far too early to tell if Snap is going to take the world by storm the way it’s IPO hype suggests. I’ll be here to gripe about its success or gleefully cheer its demise, but in the meantime, I thought we’d take a look back at some other IPO darlings from the world of tech and Web 2.0 to see how they’re launch went and how the companies are doing now.
IPO Date: August 19th, 2004
Offer Price: $85
First Traded Price: $100
Current Price: $870 (1 2-for-1 split in 2014)
Now Alphabet Inc and with Class A shares (GOOGL) and non-voting Class C shares (GOOG currently trading at $848 per share), I hardly need to tell you how successful Google has been since its IPO. It makes for a great test case, though; the headlines were as varied and as wild back then as they are now. Warnings of impending lawsuits, talks of the “troubled” stock trying to make its way to market, a price and a valuation (what now seems like a modest $23 billion) that many warned were insane and unwarranted…
Early investors who threw caution to the wind are doing fine with this one. They gave Google a cash influx of $2 billion during the IPO. Though it hasn’t been the top performing stock of the 21st century, it’s on many top-ten lists, and if anything, the hype underplayed the eventual reality: that Google would become an all-powerful, all-knowing megacorp ready to take over the world. Alphabet Inc. is just the kind of name a company like that would choose, too.
IPO Date: December 16, 2011
Offer Price: $10
First Traded Price: $11.50
Current Price: $2.84
Online game developer Zynga seemed like it was on top of the world in 2011, and with a fairly reasonable share price of $10 giving the company a $7 billion dollar valuation—which seemed reasonable to many, given the popularity of games like Farmville, ZyngaPoker, and Chefville. Investors didn’t really agree, though, with the stock spending most of the first day of trading below its IPO value and closing at $9.50. A brief rally the following spring precipitated a freefall, and the stock has been trading around $3 (usually below) since 2012.
The company raised $1 billion, making the Zynga IPO the biggest since Google’s, but this time the hype didn’t last. In fact, investors soon learned that Zynga was closely monitoring its own daily users and the impact of ongoing changes to Facebook’s platform and that executives knew the company was in for a very rough ride. A lawsuit over the IPO was eventually settled, with Zynga paying ornery investors $23 million to make up for their losses. Right now, a resurgence seems incredibly unlikely.
IPO Date: May 18, 2012
Offer Price: $38
First Traded Price: $42
Current Price: $139.99
Facebook’s IPO came with more hype than any other in recent memory, Snap’s included. Part of this was due to the unpredictability of tech and Internet IPOs: there was the Zynga disaster on one hand, and on the other was LinkedIn’s IPO from earlier in 2011, which saw the company’s stock price double in the first day of trading. Speculation on which way Facebook would go helped fuel the IPO frenzy, as did heated interest from so-called “retail investors”—regular schlubs like you and I. The site was such a part of everyday life, lots of people thought owning a piece would make them rich.
Finally, the day of the IPO arrived…and a combination of NASDAQ glitches and the deflation of investors who got what they so hotly desired a moment before led to a mediocre opening. The stock closed only slightly higher than its offer price and was down more than 25% by the end of the week. Still, anyone who held on is doing just fine, having roughly tripled their investment over a five year period. As Facebook gets even savvier when it comes to actually generating revenue instead of interest and investor dollars, grabbing a few shares of FB looks like a sweet deal, even if the IPO still seems like a lot of hoopla over nothing.
IPO Date: November 7, 2013
Offer Price: $26
First Traded Price: $45
Current Price: $15.19
Twitter is almost as boring a flogging target as Yahoo, but no discussion of high-profile tech IPOs would be complete without it. Seen in many ways as Facebook’s rival, the relative tepidness of the former IPO had everyone’s teeth chattering for Twitter. When it exploded out of the gate with a trading price 73% higher than the IPO price, which had already given the company a value of roughly $12.5 billion, investors only reacted with more delight, and many analysts were rosy.
The stock peaked a mere two months later, though, and despite rallies in the fall of ’14 and spring of ’15, shares—and the company itself—have been in trouble since. It turns out revenue and profitability are more important than being famous, at least when it comes to shareholders, and Twitter never had the goods and hasn’t figured out how to make them. Despite its outsized IPO, it’s now in the shitter and is having trouble getting acquired despite being at a 2/3 discount from where it was when it went public.
IPO Date: August 2014
Offer Price: $25
First Traded Price: $37
Current Price: $60.74 (acquisition in progress at $63.54 per share)
Nearly doubling its per-share price in the two years it’s been trading, MobilEye wasn’t a bad investment. It’s IPO didn’t generate tons of buzz outside tech circles for a few reasons: MobilEye works behind the scenes to make driverless cars a reality, working on accident prevention solutions and other safety automation features. Its clients are businesses like Tesla, Honda, and others, so most consumers have never heard of it. It’s also an Israeli company—and now holds the distinction of having the largest US IPO by an Israeli company, raising $890 million in its first day of trading.
That distinction and the company’s recently-announced acquisition by Intel for $15.3 billion (three times the company’s IPO valuation) make it well worth mentioning here. Despite a rather rocky road, MobilEye’s share price has never dipped below the initial offer price, and the company has clearly done well for itself. Proof that as sexy as the stock market is, it’s not the most reliable predictor or even measure of success.
IPO Date: June 19, 2015
Offer Price: $20
First Traded Price: $30
Current Price: $6.10
FitBit quickly shattered its $4.1 billion valuation when it went public on Friday, June 19, 2015. On Monday, it’s share price jumped another 20%. It had more than doubled by the end of July…and then it went into a fairly steady decline, spending most of 2016 bouncing between $13 and $14 per share before dropping again in November, which started a slide to today’s price. The enormous health and fitness market, which FitBit seemed to have cornered for the smartphone market, drove a lot of investment speculation in the company early on, but sales and competition weren’t enough to sustain the interest.
FitBit is up against companies old and new for its wearable fitness tech, and the singular focus makes FitBit more of a product than a company. Competing in the world of publicly traded high tech requires more, and everyone who bought into FitBit’s IPO hype is feeling the burn now. My guess would be an acquisition is in the company’s near future, but it won’t be the boon that MobilEye’s is. Like Twitter (maybe), FitBit is going to be snapped up by a larger tech company at a bargain…and then chances are the brand will be tarnished, the products will suck, and the name will fade away.
Welcome to the corporate way, kiddos.
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