Snapchat is reportedly aiming to raise as much as $4 billion in an initial public offering.
According to Bloomberg, which cited people familiar with the matter, the IPO may give Snapchat a valuation of $25 billion–$35 billion. A final decision in terms of the size of the IPO has not been made as of yet, reported Bloomberg. Bloomberg noted the valuation could go as high as $40 billion. Snapchat, which changed its name to Snap Inc., is gearing up to launch its IPO in the first quarter of 2017. Its IPO filing will be filed confidentially with the SEC because it has revenue of less than $1 billion, Bloomberg noted.
Snapchat is tapping Morgan Stanley and Goldman Sachs Group to lead the public offering. JPMorgan Chase & Co., Deutsche Bank AG, Allen & Co., Barclays Plc and Credit Suisse Group AG will also be involved as joint book runners, Bloomberg reported.
If Snapchat is able to launch its IPO next year, it could be the start of a resurgence in tech IPOs, which Bloomberg noted was slow this year. Nine tech companies went public in 2016, with the largest being Twilio, which raised $172.5 million. There hasn’t been a mega-IPO so far this year.
Snapchat has been doing a brisk business with younger users, so much so that Facebook is trying to counter the startup as much as possible. Recently, it launched a new app aimed at under-21s. Earlier, Facebook’s Instagram had launched a copycat Stories feature after apps such as Poke and Slingshot failed to make a dent in Snapchat’s user base. As Facebook’s ad revenue comes increasingly from mobile, the company is competing for consumer attention. The new app, Lifestage, is a trendy iOS app that only the 21-and-younger age group can use and that Facebook hopes will snag some of Snapchat’s users. Users answer biographical questions about themselves by recording short video clips that others can view.