In March, Snap Inc. announced that it and the selling stockholders had sold of 230 million shares of Class A Common Stock to the public at an initial public offering price of $17.00 per share. The gross proceeds of the offering to the company and its selling stockholders was $3.91 billion. Even successful offerings have their critics, however. In this case, the critics have focused the fact that the Class A Common Stock is non-voting:
The absence of shareholder voting rights in Snap Inc.’s recent IPO has large institutional investors and asset managers gearing up for a battle they hope will prevent a war from erupting among future corporate issuers.
Common shares and similar equity securities should normally carry equal voting rights on all matters where such vote is permitted by applicable law.
Put another way, the market will price the risk posed by dual class stock, providing investors who buy the lesser voting rights stock with a discount from the price they would have had to pay if they had had full voting rights. Those who buy the stock thus are paying the right price and are fully protected.
Bernard Sharfman has also argued:
The shareholder empowerment movement’s abhorrence of dual-class share structures—based solely on the fact that they reduce or eliminate the voting power of the typical stockholder—is nonsensical. This structure has been used by some of the most successful companies in the world—including Alphabet (Google), Berkshire Hathaway, Alibaba Group, Facebook, Under Armour and LinkedIn—to create enormous wealth for their stockholders.