As we all know, Snap Inc. (NYSE: SNAP) hype train is gone and many never bought into it. Despite the fall, the app developer behind Snapchat instant-messaging service did well early upon going public this month, as it sold 145 million shares at $17 per share (Leading investment banks such as Goldman Sachs and Morgan Stanley suggested that Snapchat could have kept the offer price higher, as order book ratio was 10-to-1) during its IPO and raised nearly $2.5 billion. Following the IPO execution, price surged 44% on Day 1, followed by bopped around uncertainty for the past weeks and backslide has yet to fully develop.
But the attention Snap is drawing with its high profile IPO, does nothing to change its iffy business model or finances – its 2016 net loss was north of $500 million, despite improving revenue. And many core analysts believe that it will be difficult for Snapchat to engage users for long period of time when comparing its social platform with Facebook (NASDAQ:FB) and Twitter (NYSE:TWTR). Plus, Snapchat could also find it difficult to attract advertisers, as compare to heavyweights like Google (NASDAQ: GOOGL), Youtube and Facebook.
However, on the flipside, Snap is taking early steps not only to unlock new growth but also to diversify its revenue streams with camera-equipped spectacles sunglasses. This approach could pave the way for entry into the VR space that Facebook (FB), Microsoft (MSFT) and Sony (SNE) have shown to be potentially revolutionary.
Therefore, despite bumpy start for Snap Inc. (NYSE:SNAP), many analyst who are part of banks that work on SNAP IPO believes it could still soar as 13 initiated research coverage with nine on BUY recommendations and four on HOLD along with price target of $24 to $31. While, of the 14 analysts whose firms didn’t work on the Snapchat IPO, only two suggested that the company’s stock was worth buying with median price target at $21 a share.
That’s why suggestion would best to start looking at the First Trust U.S. Equity Opportunities ETF (NYSE: FPX), which tracks the IPO market by seeking to replicate the IPOX-100 U.S. Index. And it picked up shares of Snap at its IPO.
So if one got in on FPX, the upside and excitement of Snap’s IPO is already part of the investor’s portfolio – without the risk and volatility of buying Snap outright.
Numerous private tech companies – including some can’t-miss outfits -have filed to go public this year. It’s largely not because of consumer-focused Snap’s success. It’s because these companies are selling their products and services to businesses.
And the appetite from Corporate America for these B2B-focused firms is soaring.
The massive – if overshadowed by Snap – success of the recent MuleSoft Inc. (NYSE: MULE) IPO shows this. The software firm also gained more than 40% in its first day.
FPX is a nice way to be part of the pre-IPO world. As it’s an ETF that every tech investor should consider holding for a long time.
Tinge Research 