The initial public offering of Snap, which will be priced after the U.S. stock market closes on Wednesday, is undoubtedly one of the most highly anticipated IPOs in recent years. 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.
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.