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October 7, 2016

Snapchat reportedly eyeing $25bn IPO

Snapchat may start offering shares by late March.

By Alexander Sword

Snapchat parent firm Snap Inc. is reportedly planning an initial public offering (IPO) that could value it at more than $25bn.

Citing several people familiar with the matter, the Wall Street Journal reported that the company is preparing the paperwork to offer shares to the public as early as March 2017.

If Snap goes ahead with its plans, it will be the largest IPO in the US since Alibaba’s in 2014, which valued the Chinese firm at $168bn.

Snapchat

Snapchat is a social media app.

Snapchat, which is experiencing rapid growth, generated $60m in revenue last year.

The company reportedly told investors earlier in the year that it expects 2016 revenue to be in the range of $250m to $350m and $1bn for next year.

Research firm eMarketer expects the company to generate $366.69m in ad revenues this year, a figure estimated to jump to a whopping $935.46m in 2017.

eMarketer principal analyst Cathy Boyle said: “Advertisers are attracted to Snapchat for its broad reach among young millennials and those in Generation Z, which are valuable demographic groups for many businesses.

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“To engage those often hard-to-reach consumers, Snapchat has expanded its advertising portfolio over the past year to include a wider array of video ads, and more sponsored geofilters and sponsored lenses.”

The social media giant currently derives 95% of its ad revenues from the US. It is expected to capture 2% of social network ad dollars in the country.

In May this year, Snapchat secured $1.8bn in funding, increasing its valuation to $18bn. The funding was received from Sequoria Capital, Spark Capital, Meritech Capital Partners and Dragoneer Investment Group.

 

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