Forex brokerage IG Group (LON:IGG) is launching contracts for difference (CFDs) on the potential market cap of Snap Inc., the company behind photo-sharing app Snapchat, ahead of its anticipated initial public offering (IPO).
Once the IPO takes place, IG Group clients can spread bet or trade CFDs on how the company performs, or buy and sell its shares with a share dealing account.
Traders can invest in Snap Inc.’s IPO CFDs a minimum of GBP 5. The new instrument is offered with a margin factor of 25 and a slippage factor 50%. The CFDs will expire on 31 December, 2018, and all open trades will be voided on that date if there is no floatation.
Snap Inc. is expected to float on the New York Stock Exchange (NYSE) in March. It submitted an IPO filing on 2 February. The company is aiming to raise $3 billion and to raise its valuation to $25 billion.
Snap Inc.’s IPO is considered one of the largest US-listed tech IPIs. Traders can bet on the company’s market cap value and take advantage before the shares are released publically on the stock exchange, especially if they consider the estimated value to be over- or under-priced.
Since contracts on the IPO’s CFDs are traded on the grey market, they will be settled of your trade is calculated based on the official closing price of the first day of trading, as reported by Bloomberg.
Snapchat has some 158 million active users daily. For 2016, the company generated a revenue of $404.5 million, which represents a 600% growth from a year earlier ($58.7 million in 2015). It reported a net loss of $514.6 million last year.
IG Group operates worldwide with offices in 15 countries. It offers access to more than 10,000 markets, including forex, indices, shares, exchange-traded funds (ETFs), and binary options. In the UK it also offers spread betting.
The broker is based in the UK and regulated by the Financial Conduct Authority (FCA), but its subsidiaries are also regulated by the relevant authorities in the countries where they operate. It is a licensed bookmaker by the UK’s Gambling Commission and now a managed portfolio provider in the UK.