Snap co-founders Bobby Murphy (left) and Evan Spiegel (center) at the Snap IPO in 2017.
Drew Angerer/Getty Images
Snap intends to split its stock—if it can more than triple in price.
The Snap
chat parent company said in its second-quarter letter to shareholders that its board approved a plan to issue one Class A share for each then-outstanding share—if the price of a Class A share reaches $40.
Snap stock (ticker: SNAP) has traded as high as $83.34 in the past 12 months, but has fallen 26%, to $12.03, in after-hours trading Thursday following a disappointing earnings report in which the social-media company didn’t provide a third-quarter outlook. The stock had closed earlier at $16.25, up 5.4%.
“We are not satisfied with the results we are delivering, regardless of the current headwinds,” the company said in the letter.
The split announcement was preceded in the letter by news that co-founders Evan Spiegel and Bobby Murphy entered in deals to continue as CEO and chief technology officer, respectively, until at least Jan. 1, 2027. They’ll each make $1 a year with no equity compensation.
The company said the stock dividend would allow the co-founders to sell or donate additional class A shares instead of class B or class C shares. The company’s voting structure is very founder-friendly: The pair controls 99.5% of the firm’s voting rights. Class B shares, which don’t trade publicly but can be converted to class A shares, carry one vote. Class C shares carry 10 votes each and are held by the co-founders alone.
Of course, Snap shares would need to get back to $40 for any of this to matter.
Write to Connor Smith at [email protected]
