Dow 21k & Snapchat breather
The Dow Jones reaching a historic 21,000 and with all the attention on the Snap Inc (NYSE:SNAP) IPO, equity markets have taken a bit of a breather.
Trump-inspired optimism is alive and well but the huge rally following his first speech to Congress has left little room for shares to advance further in the short term.
Taking a moment to look past The Donald, there are increasing signs for economic optimism in Europe that can justify a rising stock market. Data on Thursday showed unemployment in Europe steadied at
Snap IPO
Snap could easily be the hottest new listing this year. Snap, the owner of the Snapchat messaging app is the first major social media IPO since Twitter Inc (NYSE:TWTR) and the largest tech debut since Chinese e-commerce giant Alibaba (NYSE:BABA) floated in 2014.
Shares of Snap were sold for $17 per share, above the initially touted range of $14-$16. The listing was reportedly ten times oversubscribed, meaning many of those left out were buying on the official open, setting it up for a successful first day on the NYSE. Snap eventually started trading at $24, meaning IPO investors banked a tidy little 40% profit.
It’s well accepted that investors are overpaying for Snap based on expected sales and earnings, but it doesn’t seem to matter. With such exuberance in the marketplace, Snap’s timing is impeccable.
Even if it’s not worth the price tag, Snap is in high demand on its first day of trading anyway because investors have been so starved of high-growth potential IPOs. ‘Unicorns’ (tech start-ups valued over $1bn) like Uber and Airbnb have opted to stay private, limiting the supply of publicly investable firms. The desire to invest in the ‘next Google’ captures the imagination of every IPO investor.
Convatec leads a flat FTSE
Convatec was the top riser on an otherwise lacklustre FTSE 100 after reporting a promising set of maiden results. At the other end of the scale, Capita was bottom of the FTSE after reporting a 33% drop in pre-tax profits and announcing its chief executive is stepping down. Government budget cuts have seen the flow of new contracts to Capita diminishing.
The UK benchmark equity index spent most of the day osculating around Wednesday’s record close. Currency markets were also little changed, meaning minimal impact on the value of UK stocks from the value of Sterling.