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Wall Street’s Payday from the Snap IPO
Secondary trading in Snap has been a roller coaster ride. The IPO was priced at $17 a share and Snap opened for trading in the market at about $24 a share. That was on Thursday, 3/2.
- On Friday, 3/3, Snap shares hit an intraday high of $29.44.
- On Tuesday, 3/7, Snap shares gapped down and traded as low as $21.30 a share.
That market volatility is probably welcomed on Wall Street - because it generates enormous profits for market makers and prop traders on Wall Street, with tens of millions of shares trading hands every day.
Volatility aside, the investment bankers who underwrote the offering had a big payday. All told 26 underwriters sold 200 million shares at $17 apiece. The $3.4 billion IPO threw off underwriting fees of $85 million – based on a 2.5% rate. So, while that figure is relatively low for a major tech offering on Wall Street, it was hugely welcomed, particularly since it was not a hard sell.
BIGGEST WINNERS. Reaping the largest fees were Morgan Stanley, the lead underwriter, and Goldman Sachs. They combined to sell over half the 200 million shares. Morgan Stanley took down nearly $26 million in fees, while Goldman earned just over $21 million.