Snap, the owner of the popular photo and social media app Snapchat, had its big IPO Thursday night, with shares going for $17 apiece. That gave the company a $23.8 billion valuation, even though Snap has never turned a profit and even stated in its IPO filing that it might never be profitable.
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Snap's IPO was much more expensive than those of other tech companies (SNAP)
Snap had the highest price-to-revenue ratio among recent tech IPOs, according to Fortune.
A Snapchat sign hangs on the facade of the New York Stock Exchange (NYSE) in New York City, U.S., January 24, 2017
By at least one measure, Snap had a more expensive IPO than several other big recent tech IPOs, according to Fortune's Lucinda Shen.
Because Snap has never been profitable, Shen looked at the price-to-revenue ratio for Snap and several of its peers, rather than the more conventional price-to-earnings ratio normally used when valuing a stock.
Snap's IPO valuation of $23.8 billion and 2016 revenue of $404.5 million gives a ratio of 58.8. Shen noted that Snap's price-to-revenue ratio was much higher than those of a lot of other big tech companies at the time of their IPOs.
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The closest ratio, according to Shen, was Twitter's, with the social media company's IPO valuation being 44.8 times its revenue.
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