Snapchat is popular among teens and twenty-somethings, but their parents, or even grandparents, are more likely to consider buying into Snap Inc.’s $3.2 billion public offering. And that’s an issue as Snap’s initial public offering approaches. 
 
 Unlike Snapchat’s young user base — Snap says the majority of users are between 18 and 34, and users younger than 25 are the most active — many professional investors neither use nor understand the disappearing-message app. Combined with Snap’s large losses and decision not to issue voting rights to investors, the dissonance is holding back some from investing in the offering and may cause issues for the stock down the line. 
 
 Read also: The two views of Snapchat: An app that has peaked or a platform set to blossom 
 
 Snap SNAP, +1.54% is expected to price its offering Wednesday evening. At the top of its $14-to-$16 price range, Snap would receive an initial valuation of $18.5 billion, and this issue will certainly not keep it from selling the initial batch of shares: The offering is reportedly oversubscribed at the high end of Snap’s range, according to Reuters. 
 
 The question is long-term demand after shares begin trading Thursday on the New York Stock Exchange. Experts say that reluctance and confusion on the part of traditional investors could weigh on the stock, and those who do buy could be more likely to drop their shares if the company has a tough quarter. 
 
 While saying that he expects Snap to be the “most high-profile” but “controversial” IPO of the year, Rob Sanderson, managing director of MKM partners, wrote in a note Monday that it may face pressure from a lack of understanding of the app from older investors. 
 
 “We think the use case is much less tangible to middle-aged money managers than an Uber or Airbnb,” Sanderson wrote, adding, “We expect this will be a hurdle for the stock, one that lasts a long time.” 
 
 Paul Nolte, senior portfolio manager of Kingsview Asset Management, said he is struggling to comprehend Snap’s high valuation alongside large net losses and a low revenue-per-user ratio. Neither he nor his clients use Snapchat — “I’m old and they’re older,” he said — which makes it hard to see a user-growth case. 
 
 “Because of that lack of understanding, the first reaction is we’ll steer clear until we see the dust settle,” Nolte said. 
 
 Nolte, who invested in Facebook Inc. FB, -0.76% , but not Twitter Inc. TWTR, -1.25% , said he prefers to wait until the IPO lockup is complete to buy stock so he can see whether there is a long-term case or at least a path to profitability, though he has clients who are interested in investing at the time of an IPO. 
 
 See also: How Snap stacks up against Facebook and Twitter 
 
 David Menlow, president of SecondaryRatings.com, which rates IPOs and secondary offerings, attributes investors’ reported enthusiasm to an overall lack of tech IPOs and the buzz around the offering more than Snap’s long-term prospects. Older investors may not be leading the charge to invest, but rather are deferring to the opinions of their younger counterparts, he said. 
 
 “The investors are just looking around to say ‘I guess it sounds good because everyone’s telling me it is,’” Menlow said. 
 
 Snap’s roadshow presentation included a kind of tutorial, which explained how the app works. It also broke down each part of the app in its prospectus. 
 
 Snap’s prospectus broke down each part of the Snapchat app for unfamiliar potential investors. 
 
 Greater understanding of the app may not lead to higher opinions, though. Eric Schiffer, chief executive of private-equity firm Patriarch Organization, said he believes that if investors were to understand and use Snapchat, they would see that the company faces a large competitive threat from Facebook’s Instagram and its recently launched “Stories” offering that mimics Snapchat’s popular feature with the same name. 
 
 “I think that if they sat down at the table and had a conversation with their kids, they’d realize how flawed the investment is,” said Schiffer, who admitted he “occasionally” uses the app. 
 
 Don’t miss: Snap IPO boils down to a single question: Do you trust Evan Spiegel? 
 
 Snap reported slowing growth in daily active users and cited “increased competition” since Facebook released the Instagram Stories feature. 
 
 Snap may see trouble later on from investors who don’t quite understand the app, Menlow said, especially if Snap’s user growth slows during a quarter. If they don’t buy in to the importance of Snapchat or understand social media cycles, they may back away from the stock. 
 
 “If they had the understanding, they would know that this is a blip in a positive long-term profile,” Menlow said. 
 
 Opposing views: Three reasons to skip Snap IPO and Snap could be the new Facebook 
 
 Even if investors don’t use the app, they are able to see the benefits and advertising opportunities of social media companies while still not being able to separate Snapchat out as a clear winner, said Kim Forrest, vice president at Fort Pitt Capital Group. 
 
 “I think that shows how social media has really identified itself to investors regardless of age,” Forrest said. 
 
 Still, Forrest said she is steering clear of the offering because it does not sound like Snap will be returning shareholder capital for a long time and it is not giving investors voting rights. ||||| (Reuters) - Snap Inc priced its initial public offering above its target range on Wednesday, raising $3.4 billion as investors set aside concerns about its lack of profits and voting rights for a piece of the hottest tech IPO in years. 
 
 At $17 a share, the parent of popular disappearing-messaging app Snapchat has a market valuation of roughly $24 billion, more than double the size of rival Twitter and the richest valuation in a U.S. tech IPO since Facebook in 2012. 
 
 The company had targeted a valuation of between $19.5 billion and $22.3 billion. 
 
 The book was more than 10 times oversubscribed and Snap could have priced the IPO at as much as $19 a share, but the company wanted to focus on securing mutual funds as long-term investors rather than hedge funds looking to quickly sell, the source said. 
 
 The share sale was the first test of investor appetite for a social-media app that is beloved by teenagers and 20-somethings who use it to apply bunny faces and vomiting rainbows onto selfies but faces a challenge in converting “cool” into cash. 
 
 Despite a nearly 7-fold increase in revenue, the Los Angeles-based company’s net loss jumped 38 percent last year. It faces intense competition from larger rivals such as Facebook as well as decelerating user growth. 
 
 Snap priced 200 million shares on Wednesday night at $17, above its stated range of $14 to $16 dollars a share. 
 
 The sale had the advantage of favorable timing. The market for technology IPOs hit the brakes in 2016, marking the slowest year for such launches since 2008, and investors are keen for fresh opportunities. The launch could encourage debuts by other so-called unicorns, tech start-ups with private valuations of $1 billion or more. 
 
 Investors bought the shares despite them having no voting power, an unprecedented feature for an IPO despite years of rising concerns about corporate governance from fund managers looking to gain influence over executives. 
 
 Snap is set to begin trading on Thursday on the New York Stock Exchange under the symbol SNAP. 
 
 A Banner for Snap Inc. hangs on the facade of the the New York Stock Exchange (NYSE) on the eve of the company's IPO in New York, U.S., March 1, 2017. REUTERS/Brendan McDermid 
 
 OVERNIGHT MILLIONAIRES 
 
 Although Snap is going public at a much earlier stage in its development than Twitter or Facebook, the 5-year-old company is valuing itself at nearly 60 times revenue, more than double the 27 times revenue Facebook fetched when it went public in 2012. 
 
 To justify its suggested 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. 
 
 The company has been vague on its plans to lead and monetize image-driven conversations, but has suggested investors put faith in the vision of its co-founder Evan Spiegel, whom it introduced in its investor roadshow as a “once-in-a-generation founder.” 
 
 The 26-year-old will walk away with a roughly 17 percent stake valued at $4.05 billion 
 
 Spiegel and co-founder Bobby Murphy will each be selling 16 million shares in the IPO that earned them $272 million apiece. 
 
 Slideshow (7 Images) 
 
 Dozens of other Snap investors could become overnight millionaires. 
 
 Spiegel and Murphy will maintain tight control over Snap’s stock through a unique three-share class structure. The structure will give Spiegel and Murphy the right of 10 votes for every share. Existing investors will have one vote for each of their shares, while new investors will have no voting rights. ||||| Snap Inc. shares closed up 44% Thursday after the Snapchat parent company made its highly anticipated debut on the New York Stock Exchange. 
 
 Shares of Snap SNAP, -0.84% opened at $24 after the company priced its initial batch of shares at $17. Snap sold 200 million shares to raise $3.4 billion, making it the largest U.S. initial public offering since Alibaba Group Holding Ltd.’s BABA, +1.04% offering in 2014. The IPO price commanded an initial market capitalization of $19.7 billion, though that valuation rises to roughly $24 billion on a fully diluted basis. Both figures are above Snap’s last reported private market valuation of $17.8 billion. 
 
 The stock traded up as much as 53% above its IPO price Thursday, hitting an intraday high of $26.05 
 
 See also: Six things to know about Snap as it goes public 
 
 Alibaba raised $21.8 billion in its initial offering, but that total rose to $25 billion after underwriters also sold the so-called green shoe, extra shares companies make available at IPO time. Snap offered its underwriters the option to purchase up to an additional 30 million shares in its green shoe, and will disclose at a later date if they were sold. 
 
 Despite the share pop, Santosh Rao, head of research at Manhattan Venture Partners, said the sentiment from investors has been largely negative due to Snap’s expensive valuation compared with its revenue. The app launched in 2011, but generated no revenue until 2015. While advertising efforts have ramped up since, with total revenue reaching $404.5 million in 2016, the company is paying far more to keep the service running and generating huge net losses. 
 
 Still, Snapchat is the first major venture-backed technology IPO of 2017, after the number of such offerings plummeted in 2016, and investors wanted to get in on it, he said. 
 
 “I think people just want to get in and say, ‘Hey, what’s the worst that can happen?,’” Rao said. 
 
 First Take: Snap’s high price and big pop mean nothing 
 
 In a sense, it is nice to see investors excited about a new issue, said Kathleen Smith, principal at Renaissance Capital, a manager of IPO-focused exchange-traded funds. But given the large share move alongside the high valuation, she too feels investors may not have fully evaluated the company’s fundamentals. 
 
 “It’s the kind of first day pop that suggests some sort irrational exuberance,” Smith said. 
 
 Investors last year were more cautious, as the average IPO priced below the midpoint of the range and had an average one-day pop of 5%, according to Renaissance Capital. 
 
 Don’t miss: Two views of Snapchat: An app that has peaked or a platform set to blossom 
 
 Snapchat has grabbed the attention of a generation of younger smartphone users, who post and share photos and videos on the app that can disappear after a set amount of time. The app—developed by Stanford University students, two of whom are still executives at Snap—had 158 million daily active users as of December 2016, according to the company’s prospectus. 
 
 Snap has big plans for the future, though. The first hardware offering from the company—Snapchat Spectacles, sunglasses that have a small camera installed and can upload video to the app—launched last year, and executives described Snap as “a camera company” in the run-up to the IPO. The app also has a payments feature called Snapcash. 
 
 Read also: Snapchat founders, investors cash out nearly $1 billion in IPO 
 
 Future innovations, whether it be in cameras or in additions to its social platform, are what investors were buying into, according to Ethan Kurzweil, partner at Bessemer Venture Partners. 
 
 “You’re counting on them to come up with something that will reignite their growth,” Kurzweil said. 
 
 Snap will have to fend off rivals for its core business as it attempts to develop new sources of revenue. The company admitted in filings with the Securities and Exchange Commission that it experienced “increased competition” in 2016, which many understood as an acknowledgment that Facebook Inc.’s FB, +0.52% Instagram Stories offering had managed to steal traffic away from Snapchat’s feature that is also called Stories. 
 
 See also: How Snap stacks up against Facebook and Twitter 
 
 The competition from Instagram, as well as the recent uptick in the market, likely played into Snap’s decision to go public at this time, Rao said. 
 
 “I think what they decided was Instagram is coming on strong, they’re copying everything that we have and it was stealing the thunder a little bit,” Rao said. 
 
 Snap initially set a price range of $14 to $16 for the Class A common shares it sold in the IPO, which don't have voting rights, a rare and potentially unprecedented move. The Snap co-founders who are still with the company, Chief Executive Evan Spiegel and Chief Technology Officer Bobby Murphy, will together control more than 88% of voting power in the company thanks to that move. 
 
 Related: Can IPO market Snap out of its doldrums? 
 
 There were only 21 U.S. tech IPOs last year, according to global IPO investment adviser Renaissance Capital, which said 2016 was the worst year for IPO returns since 2003 and had the lowest number of offerings since 2009. 
 
 Morgan Stanley and Goldman Sachs were the lead underwriters on the offering.
– Those who remember the hype when Alibaba priced its initial public offering of stock in 2014 will get to relive that excitement Wednesday when Snap does the same. Reuters reports the owner of the Snapchat messaging app will serve up a number at the end of the trading day, with expectations of anywhere between $14 and $16 a share and a possible valuation of more than $20 billion. What the buzz is on this "eagerly awaited" IPO: Recode offers a quick-hit Q&A, including such queries as: "What could possibly go wrong with Snap going public?" Kids, teens, and young adults are the ones who use Snapchat the most, but it's the older generations who are more likely to be investors. The elder set's confusion over the vanishing messages could be a problem, per MarketWatch. All eyes would be on Snap CEO Evan Spiegel right now—if anyone could find him. The Wall Street Journal takes a closer look at the company's "elusive" (and apparently reticent) founder. "Evan doesn't talk much," shrugs an early investor. The company's plans for the future are an important piece of the IPO puzzle. Sources tell the New York Times those plans may involve a drone. Despite Snapchat's sluggish user growth and the company's hefty hosting costs, Mad Money's Jim Cramer believes the trade will be a "phenomenal" one. "I think the good absolutely outweighs the bad here," he says, per CNBC. Lock them up? Find out why a big block of investors will agree not to sell their Snap stock for at least a year at Business Insider. A Barron's Next primer ponders whether Snap will follow in the footsteps of Facebook (up 250% since its own IPO) or Twitter (not doing quite as well).