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Snap's stock price hard to justify: Barron's

Published 03/05/2017, 01:35 PM
Updated 03/05/2017, 01:35 PM
© Reuters. A stuffed ghost rests on a trader's screen above the floor of the New York Stock Exchange (NYSE) after Snap Inc. listed their IPO in New York

© Reuters. A stuffed ghost rests on a trader's screen above the floor of the New York Stock Exchange (NYSE) after Snap Inc. listed their IPO in New York

NEW YORK (Reuters) - Snap Inc's (N:SNAP) share price looks overvalued following a surge in the wake of its much-anticipated initial public offering last week, according to an article in Barron's.

Shares of the messaging app company closed at $27.09 on Friday, well above its IPO price of $17 per share set on Wednesday. The owner of Snapchat, an app popular with young people for its disappearing messages, raised $3.4 billion in its IPO.

According to the Barron's article, Snap is valued at about 34 times its projected 2017 revenue of $1 billion, based on its enterprise value, while Facebook (O:FB) is valued at 10 times sales.

© Reuters. A stuffed ghost rests on a trader's screen above the floor of the New York Stock Exchange (NYSE) after Snap Inc. listed their IPO in New York

Even if strong growth is assumed, it is hard to justify more than half the current stock price, Barron's said.

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