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EghtesadOnline: Snap Inc., maker of the disappearing photo app dependent upon the fickle favor of the millennial demographic, is going public at a valuation at least twice as expensive as Facebook Inc., and four times more costly than Twitter Inc.

Snap sold 200 million shares in its initial public offering at $17 each, according to a statement Wednesday. At that price, it has a market value of about $20 billion, based on 1.16 billion shares outstanding after the IPO. That implies a multiple of about 21.4 times EMarketer’s estimate for Snap’s 2017 advertising sales, Bloomberg reported.

It’s a “nosebleed” valuation, but “there’s a nosebleed’s worth of demand,” said David Kirkpatrick, chief executive officer of Techonomy Media.

Snap raised $3.4 billion in its IPO, pricing shares above the marketed range, in the biggest social-media IPO since Twitter more than three years ago. It’s also the first tech company to list in the U.S. this year.

“There is a huge amount of people who really just want to get in on the hot new thing, who see this as the first opportunity of its type in a number of years,” Kirkpatrick said in an interview on Bloomberg TV. Still, “they’ve got some serious work to do to actually make a real business that makes profits.”

Real Business

Snap, which posted a net loss last year of $515 million, even as revenue climbed almost sevenfold, has some things to prove. It needs to continue to increase revenue per user, address slower user growth -- which fell below 50 percent in the fourth quarter for the first time since at least 2014 -- and inch closer to profitability.

Facebook, with about 1.2 billion active daily users on its flagship platform and 1.2 billion on its messaging tool WhatsApp, trades at a multiple of about 10.5 times revenue estimates for this year. Facebook’s Instagram introduced a video-reel feature -- similar to Snapchat’s stories -- that already has 150 million daily users. That’s in line with Snap’s daily active count of about 158 million.

While Facebook’s shares languished for more than a year after its IPO, the stock surged once the company’s strategy of betting on mobile software started to pay off and revenue and profit exceeded estimates.

Twitter, with more than 300 million monthly active users, comes in at 4.8 times projected revenue. The social media site had an impressive debut, then proceeded to stumble as user growth slowed.

Snap faces what those companies faced, with one proven product to date under its belt.

First-Day Pop

The Los Angeles-based company offered the shares in its IPO for $14 to $16 each. Orders for the offering were concentrated at about $17 to $18 a share, people familiar with the process said Tuesday. Demand outpaced the number of shares being offered by a multiple of 10, people familiar with the situation said.

Including unexercised stock options and other convertibles for a total of 1.39 billion fully diluted shares, Snap would have a fully diluted value of about $23.6 billion, according to a person with knowledge of the matter, who asked not to be identified because the information is private.

Given the interest, Snap could have priced the shares at $19 each, the person said, but executives wanted to ensure that shares would make a decent gain in their debut.

The stock will start trading Thursday, listed on the New York Stock Exchange under the symbol SNAP. The debut may benefit from good timing: U.S. equities advancedWednesday, setting records on the heaviest trading volume so far this year.

Morgan Stanley and Goldman Sachs Group Inc. led the offering. Goldman Sachs will be the stabilization agent, ensuring the first day of trading goes smoothly.

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