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February 16, 2017

Snapchat parent eyes $22 billion IPO

Snap Inc. has set the value for it's upcoming IPO as high as $22 billion.

By Joe Clark

Snapchat parent company, Snap Inc, has estimated it’s potential value at $22 billion ahead of its upcoming initial public offering.

The company behind the hugely popular temporary-messaging service has been talking about it’s upcoming IPO since late last year and has set it’s value range between $19.5 billion (£15.6 billion) and  $22.2 Billion, the Journal reported.

Currently share prices are expected to be available at $14 to $16, whilst this is lower than initial estimates of $20-25 billion the IPO still has the potential to become the largest technology public offering in over a decade since Alibaba Holding raised $25 billion. It’s also the largest technology IPO in the US since Facebook.

Snapchat

In 2016 the company’s net loss was $514.6 million despite a revenue of $404 million, this follows on from a net loss of $373 million in 2015. However 2015 revenue was just $58.7 million, meaning a growth of nearly 600%.

In a statement the company said: “We have incurred operating losses in the past, expect to incur operating losses in the future, and may never achieve or maintain profitability.”

Snapchat’s revenue is generated mostly from ads, and the company has recently approached major advertisers to increase their spending over the next few years. It’s younger user base, primarily 13-24, makes it an attractive prospect, especially as younger people move away from Facebook.

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In a controversial move Snap Inc. may be the first IPO in US history that does not grant voting rights to investors, according to the IPO filing.

Snap said: “Our two co-founders have control over all stockholder decisions because they control a substantial majority of our voting stock.

“We are not aware of any other company that has completed an initial public offering of non-voting stock on a US stock exchange.”

“We therefore cannot predict the impact our capital structure and the concentrated control by our founders may have on our stock price or our business.”

Snapchat launched in 2012 as an app that allowed users to send photo messages that would disappear after a certain time, the company rebranded as Snap Inc. a camera company, in 2016.

Snap Inc. is expected to go public as early as March.

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