Magazine article Global Finance

Snap Clicks without Votes

Magazine article Global Finance

Snap Clicks without Votes

Article excerpt

Despite criticism over the company's weak governance model, investors snapped up shares in Snap's $3.4 billion initial offering. The company's co-founders, Evan Spiegel and Bobby Murphy, worked to secure a combined 88.8% voting interest while raising more than the $3 billion offered by their larger rival Facebook in 2013. Some reports indicated that young investors backed the IPO of Snapchat's parent because of their fondness for the video-sharing app.

Snap's initial offering of nonvoting shares also turned the page on the "one share, one vote" culture as investors took a leap of faith. And millennials may be only part of the picture. "While millennials are avid users of the Snapchat platform, they weren't the only generation to jump at the opportunity to invest in the company," Nicole Sherrod, managing director for trading at US brokerage TD Ameritrade, tells Global Finance.

"TD Ameritrade found the average age of the Snapchat investor was 47; and of the 5,500 clients that traded Snap as their first investment, the average age was 38," Sherrod says in emailed remarks. And with Facebook's WhatsApp and Instagram biting into Snapchat's prime user growth, the higher age group could prove a good bet in the long term. "Already, Snap is seeing much faster growth outside of the 12-24 age range," FBN Securities analyst Shebly Seyrafi says in a research note.

Snapchat's 158 million users are mosdy millennials aged 18-24, a younger group than Facebook's. Millennials mostly trade the stock of tech companies; and their most popular stocks in 2016 were Apple, Facebook, Amazon and Netflix, according to TD Ameritrade. …

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