Snap Inc. surged in its debut as a publicly traded company Thursday, after raising a greater than expected $3.4 billion in an initial public offering.
Shares of Snapchat’s parent company opened for trading at $24, up about 41% from the IPO price of $17 apiece. At the opening price, Snap had a valuation of about $33 billion.
The stock closed at $24.48, up 44%.
Snap’s cofounders, Evan Spiegel, 26, and Robert Murphy, 28, rang the opening bell on the exchange earlier Thursday. At the IPO price, Spiegel’s stake in the company is worth at least $4.5 billion. Murphy’s stake in Snap is valued at closer to $3.9 billion.
The shares opened for trading at 11:19 a.m. after a period of “price discovery” during which traders on the floor of the exchange try to corral demand for the stock. Speaking on the floor of the exchange, Glenn Carell, director of NYSE floor operations for Global Trading Systems, said the price discovery took a long time because of heavy demand from buyers who didn’t get allocations they wanted in the IPO itself. Carell expects the stock to end its first day of trading around $24 or $25 a share.
Snap’s is the first tech IPO of the year, the first offering from a social network since Twitter went public, and the largest tech deal since Alibaba went public in 2014.
It is going public at an opportune time. Stock benchmarks hit record highs on Wednesday, with the Dow Jones Industrial Average closing above the 21,000 mark for the first time.
Since it was launched in 2011, Snapchat has matured from a “sexting app” to one that still deletes messages by default, but is a viable competitor to companies like Facebook and Twitter.
According to its IPO prospectus, it posted a net loss of $514.6 million in 2016 and warned that it may never be able to achieve or maintain profitability. It earned $404.4 million in revenue in 2016, up from $58.6 million in 2015.
Snap is “significantly overvalued given the likely scale of its long-term opportunity and the risks associated with executing against that opportunity,” said Brian Wieser, an analyst at Pivotal Research Group, in a note on Thursday. He rated the stock a “sell” with a $10 price target.
During the roadshow, investors raised questions about the slowdown in the rate of active users, and how much potential Snapchat has as an advertising platform. Snap said its biggest revenue opportunity is the growing budget for worldwide mobile advertising, which could reach $196 billion by 2020 from $66 billion now.
“Snapchat’s slowing user growth ultimately caps its long-term revenue opportunity,” said Anthony DiClemente, a Nomura analyst who sees 6% downside to the stock, in a note.
Snap’s stock is listed under the ticker SNAP. The shares offered to investors will have no voting rights.
Portia Crowe contributed reporting.