Snap IPO has come a long way since its inception

Snap IPO has come a long way since its inception

One of the hottest IPOs of the 2010 years was that of Snap Inc SNAP. Snapchat's parent company was one of the emerging social media companies that were hoping to replicate the success of Twitter, Facebook and others.

Here is a look back at the IPO and what has happened since.

What Happened: Snap went public on March 2, 2017 at $17 a share. One of the biggest IPOs in several years was the company's value at $24 billion at the time.

The company raised over $3 billion and was crowned for years of future growth. Shares opened for trading at $24 and closed up over 40% in their first day of trading.

Over the years, optimism continued for Snap with augmented reality efforts, short-form video and continued growth of its social media platform, best known for disappearing messages.

Snap reported its fourth quarter financial results last week that continued a trend of declining advertising revenue and several macro issues that impacted the company's business.

Some analysts question the company's future growth efforts and line of sight to profitability after Snap pulled back once a darling during the high growth stocks period.

The investors who got in on the Snap IPO would have had mixed results, depending on whether they sold or are still holding shares.

Investing $1,000 in Snap IPO: Snap went public on March 2, 2017. Some investors may have been able to scoop shares up during the public offering at a price of $17 per share, which is the reference price for this exercise.

A $1,000 investment could have purchased 58.82 shares of the SNAP stock. The $1,000 investment in SNAP would be worth $584.08 today, based on a price of $9. 93 was for SNAP at the time of writing.

This is a loss of 41.6% since the 2017 IPO. The investment would be down an average of 6.9% annually over the last six years.

It might not be bad for investors who bought in on the Snap IPO or shortly after. Snap shares hit an all-time high closing price of $83.11 in September 2021. At the time, 53 were up 388.9%.

The investors who ignored the Snap IPO and instead invested in a broad market index ETF like the SPDR S&P 500 ETF Trust SPY have fared better.

A $1,000 investment in the SPY would be up 68.8% since March 2, 2017, since the Snap IPO took place at the same time. This is an average annual gain of 11.5% over the last six years.

There are several takeaways from the hypothetical investment. One lesson could be that it is important to consider taking profits on investments or selling part of a position. The investor who sold a portion of Snap's gains at all-time highs in 2021 would still be in the green on the trade.

High growth stocks don't always beat the market. Often times when high growth companies hit the public market, they are hyped by analysts and investors and have high expectations. If the expectations aren't met or new competitors emerge, investors often sell and look for their next trade.