By Lauren Hirsch
NEW YORK (Reuters) - Snap Inc's in-demand shares were set to rally on their first day of trading in New York on Thursday, after the owner of the popular Snapchat messaging app raised $3.4 billion in its initial public offering (IPO), above its price expectations.
Early indications pointed to the shares opening up at between $22 and $24, after the IPO priced on Wednesday at $17 per share. The IPO book was oversubscribed by more than 10 times, boosting the chances of a pop on the first day of trading.
The New York Stock Exchange carried out a trial run last week to make sure the third-biggest technology IPO ever goes smoothly.
Facebook Inc's eagerly awaited market debut in 2012 was marred by a technical glitch at rival exchange Nasdaq.
After pricing its IPO at $17 a share, the owner of the popular disappearing-message app has a market value of roughly $24 billion, more than double the size of rival Twitter Inc and the richest valuation in a U.S. tech IPO since Facebook five years ago.
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Snap co-founder Evan Spiegel, who last night earned $272 million on the offering, showed up to the floor of the exchange in a suit and tie to ring the bell that marks the first day of trading, before leaving the building to watch festivities away from the spotlight he famously eschews.
Bookrunners on the deal completed allocating shares to the IPO buyers shortly after the start of trading on the NYSE, according to a capital markets source familiar with transaction. That clears the way for Goldman Sachs Group Inc, which is overseeing the stock's open as its stabilization agent, to allow it to start trading on the NYSE.
As stabilization agent, Goldman Sachs manages Snap's price setting and the additional allocation of shares to underwriters.
The IPO is the first test of investor appetite for a social-media app that is beloved by teenagers and people under 30 for applying bunny faces and vomiting rainbows onto selfies, but has yet to convert "cool" into cash.
Despite a nearly seven-fold increase in revenue, the Los Angeles-based company's net loss widened 38 percent last year. It faces intense competition from larger rivals such as Facebook's Instagram as it grapples with decelerating user growth.
Snap priced 200 million shares on Wednesday above its expected range of $14 to $16 dollars a share.
The sale was well timed, as investors look for fresh opportunities after 2016 marked the slowest year for tech IPOs since 2008. The launch could encourage debuts by other so-called unicorns, tech startups with private valuations of $1 billion or more.
Investors bought the shares despite them having no voting power, an unprecedented feature for an IPO at odds with rising concerns about corporate governance over the past few years from fund managers looking to gain influence over executives.
Although Snap is going public at a much earlier stage in its development than Twitter or Facebook, the five-year-old company is valuing itself at nearly 60 times revenue, more than double the 27 times revenue Facebook fetched in its IPO.
To justify its relatively high valuation and fend off concerns about slowing user growth, Snap has emphasized how important Snapchat is to its users, how long they spend on the app and the revenue potential of the emerging trend for young people to communicate with video rather than text.
Snap is set to begin trading on Thursday on the New York Stock Exchange under the symbol SNAP.
(Reporting by Lauren Hirsch in New York; Editing by Bill Rigby and Meredith Mazzilli)