Snapchat’s IPO Perception vs Reality
Snap Inc’s Initial Public Offering on March 2nd made Evan Spiegel the youngest self-made billionaire in the world. The tech entrepreneur is now worth $5 billion, thanks to his company now being valued at $28 billion after a wildly successful IPO. Shares of Snap Inc., the parent company of the social media sensation Snapchat, far exceeded even the most bullish predictions, ending the day up 44% from its IPO price of $17.
The closing valuation alleviated fears that existed around the company in the buildup to the IPO. Notable concerns among the potential investors included the slowing growth among the user base and the potential threat posed by Instagram (who’s parent company, Facebook, tried to buy Snapchat for $3 billion in 2013). The ephemeral messaging app was also being used as a measuring stick for other tech start-up giants. Whichever way you cut it, Snap Inc. had an incredible day.
Amid the celebration, social and media intelligence from Zignal underscored some of the realities the young company will face as a public company. Publicly traded companies abide by different rules compared to fledgling startups, something Snap will soon learn. They are beholden to their shareholders and stock price, and public perception alone can slash this figure. Most importantly, Snap’s brand reputation and valuation face far more risks in a publicly traded world.
News around the massive IPO was heavily focused on the success of the stock price (reflected in the abundance of money related emojis in the emoji cloud). That said, Zignal’s media intelligence revealed some issues that Snap Inc. may have to address in the near future. With the stock price more volatile in the nascent days of a publicly traded company, Snap needs to be weary of these issues before they are elevated to a wider audience.
Sentiment levels online were not as positive as the stock market. The negative sentiment outweighed the positive, with net negative sentiment finishing the day at 51%.
This tepid public response to the IPO was a reflection of a couple of stories around the business practices of Snapchat, and animosity from locals towards the company. News emerged that Snapchat had allegedly told an anti-gun charity to pay up, or NRA ads would appear within a story for National Gun Violence Awareness Day. Another story documented protests in Venice Beach, California, where locals voiced their displeasure towards the company for turning local apartments into new office space.
These stories were mentioned more frequently than any story discussing the success of the IPO.
The change in sentiment over time can clearly be seen. There is a massive positive spike after the success of the initial stock price, yet negative sentiment began to climb as the protests started as the story from Mic was released.
Snap’s IPO far exceeded expectations, yet the stock market and social and media intelligence can tell different stories. As a publicly traded company, Snap needs to hold itself to a higher standard than before. The spotlight over the coming months will shine brighter than it ever has before and Snap needs to make sure it knows what is coming before the story causes a real issue.
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