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Cox: Snap's IPO may benefit investors after all

NEW YORK (Reuters Breakingviews) - Snap's messages may disappear, but one thing could yet endure from its calamitous initial public offering: an incentive to treat shareholders more fairly. Inspired by investor discomfort over founder Evan Spiegel's decision to hoard all his company's voting rights for himself and a few of his bros, the compilers of America's most influential stock benchmark will henceforth bar multiple share classes. It's a victory for democratic capitalism.

The S&P Global unit that decides which stocks are included in the S&P 500 Index – to which investors around the world passively dedicate trillions of dollars of wealth – said on Monday it would no longer admit companies that violate the one-share, one-vote principle of corporate governance. That means Kappa Sigma brother Spiegel, whose company's public shares bestow upon their owners no say whatsoever in its affairs, will not be indoctrinated into a far larger and more important fraternity than the one he joined at Stanford.

There are many reasons to rejoice in this call by S&P Dow Jones Indices. In the short term, it means Snap's crummy performance won't be gumming up the party for hundreds of other companies in the benchmark. When Spiegel offered investors a chance to ride his coattails, enough of them acquiesced to the demands and delivered $3.4 billion of fresh capital. After a quick pop, their voluntary servitude has been rewarded with a quarter of disappointing results and a 23 percent decline in the value of their investment. That includes a 3 percent slide following the snub from S&P.

For all the fund managers and individual buyers who suffered through Snap, however, they can take comfort in helping pave the way for a precedent that ought to benefit future participants in American capital markets. The exclusion of Snap – or Blue Apron, another debutante with tilted voting rights that has watched 35 percent of its value incinerate since listing –...


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