IPO Boutique Brief – Snap judgments as roadshow begins

We probably are not the first to write this line and likely won’t be the last.

Snap Inc. has begun its roadshow and thus have opened itself up to snap judgments.

One of the first analysts to rate this new issue comes from across the pond, Atlantic Equities Research analyst James Cordwell set a $14 price target for Snap’s stock for the end of this financial year. That would be the low end of the initial range and imply a market cap of $19.5 billion.

Consider that a first warning shot fired.

Wooing investors, particularly ones with a more traditional style of thinking, will be difficult. That was to be expected. But should IPO investors be distracted by the noise?

There is no doubt that Snap is a sticky product. The user base is in a desired demographic for corporations to advertise to. The company convinced competent angel investors (or so we think) to pay $30.72/share for Snap at a funding round last year.

There has to be something there, right?

Or maybe many are not showing their hand as to how to really play this high-profile IPO. Remember the pops of Google, Facebook (premium at opening but sold off in day one) and Twitter? Does Snap have that kind of debut in it?

The cross currents are forming. The media is tripping (literally) over themselves to find different angles of this high-profile tech deal. Sourced and unsourced comments are finding its way into ‘print’. And just as a side-note, a very prominent outlet wanted IPO Boutique to comment on a blurb about whether a risk of ‘not having a centralized office-space’ was pertinent to the success of this IPO.

But with that being said, the media has and will never price an IPO and as the roadshows are transpiring, we would rather lean toward Morgan Stanley and Goldman Sachs & Co., the lead underwriters on this deal, for a more accurate assessment of how the deal is progressing.

But it should be stated that there were likely ‘no-doubt Snap investors’ who are starting to become unsure of this company’s future. The questions are starting to creep up: should Snap have gone public a year ago? Is this company still growing? What is the true demand from an IPO investors standpoint?

IPO Boutique has sources inside today’s roadshow in New York and premium subscribers will be getting vital information as Snap readies for its March 2nd debut.