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posted on 29 March 2017

Boom Or Bust: Tech IPOs Can Go Either Way


-- this post authored by Felix Richter

The initial public offering of Snap was undoubtedly one of the most highly anticipated IPOs in recent years.

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Despite doubts about the company’s ability to ever turn a profit, it appears as if people are lining up to buy into the company behind the en vogue messaging app Snapchat (NASDAQ:SNAP). In the four weeks since the IPO at $17, the stock has closed above $20 all but one day and closed today (29 March) at $22.55.

While the IPO will make dozens of Snap insiders and early investors very rich overnight, those buying into the IPO are by no means guaranteed a similar windfall. As opposed to popular belief, tech IPOs can go either way. Companies such as Zynga, Groupon or Twitter are currently trading far below their IPO prices, leaving those who bought shares in their IPOs and held on to them with a hefty loss on their hands.

There are other examples as well, as our chart illustrates. After a nightmare start as a public company, Facebook successfully turned things around and IPO buyers who were patient enough not to lose faith have more than tripled their investment by now.

This chart shows how stock prices of tech companies have changed since their respective IPOs.

Infographic: Boom or Bust? Tech IPOs Can Go Either Way | Statista You will find more statistics at Statista.

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