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Should You Invest in Snap Via IPO ETFs?

Neena Mishra

Snap (SNAP), the parent of Snapchat, made its public debut last week. It was the biggest IPO since Alibaba’s in 2014. The shares opened at $24 after listing at $17 and surged on the first two days and lost all those gains in the next two days.  Trading in shares has been very heavy and volatile.

While it was a hot IPO, many have been concerned about the valuation. At current share price, the company has a market cap of $26 billion. They had reported net revenue of $404 million and a loss of $515 million for 2016. No analyst has assigned a “Buy” rating to the stock.

Snap has 158 million average active daily users who send more than 2.5 billion messages every day. Instagram, which is owned by Facebook (FB), reported 300 million daily active users and their user growth is outpacing Snap’s. And, Instagram Stories is pretty similar to Snapchat.

Investors should remember that not all IPOs are successful.  Investing in smaller, rather unknown companies can be quite risky. A handful of these newly minted companies may turn out to be excellent investments; some may result in big losses.

It remains to be seen whether Snap will grow like Facebook or sputter like Twitter (TWTR). Facebook had an IPO price of $38 per share and is currently trading above $138. Twitter IPO’d at $26 per share and now trades at $15.

Using an ETF approach is a low-risk and convenient way of getting exposure to this ‘hot” corner of the investing world. To learn more about the First Trust US IPO Index (FPX) and Renaissance IPO ETF (IPO), please watch the short video above. FPX has already added Snap and IPO is expected to add it soon.


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Facebook, Inc. (FB): Free Stock Analysis Report
 
Twitter, Inc. (TWTR): Free Stock Analysis Report
 
RENAIS-IPO ETF (IPO): ETF Research Reports
 
FT-IPOX 100 (FPX): ETF Research Reports
 
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