Recent estimates have Snap's starting share price at around 16 dollars, giving the company a total valuation of about 22 billion dollars, a figure lower than the 25 billion price tag previously expected.
Given the euphoric media coverage surrounding the biggest initial public offering of the year, there are a few investor concerns that the company needs to address.
One of the biggest questions, as with all companies, is profitability. Snap Inc. had operating losses of over half a billion dollars last year, and with many research and development expenses ahead in order for it successfully compete in the social media space, it is hard to establish a plausible timeline for profitability.
Another issue is Snap's ability to compete with the much larger Facebook (NASDAQ:FB) whose platform is similar but more robust. Facebook has aggressively developed features similar to Snap's in order to bring back millennials. The results of these efforts are yet to be seen.
It is also worth noting that the shares being offered to the public have no voting rights, therefor putting all important decisions in the hands of insiders only.
Finally, the market often takes up to a year to adequately value IPOs. All major IPOs in recent years, including Facebook, Twitter, and Alibaba (NYSE:BABA), have been extremely volatile during their first trading year, and investors would be better off waiting for the price to stabilize before jumping in.