IPO

Snapchat Files For An IPO

It looks like that Snapchat IPO is happening sooner rather than later.

Snap Inc., the five-year-old parent company of the teen-beloved social media service, has finally made it official and filed.

What do we know so far?

In the filing, Snap Inc. said it valued itself at around $21 billion as of December 2016 and its shares were worth $16.33 at that time. The company noted that it would like to raise $3 billion in its IPO, but may in fact seek to raise as much as $4 billion, The New York Times reported. Snapchat will list on the NYSE under the ticker symbol SNAP.

According to the SEC S1 filing, Snap’s sales totaled $404.5 million in 2016, with a net loss of $514.6 million. With an average of 158 million people using Snapchat daily and more 2.5 billion Snaps being created each day, Snap used its filing to make a strong case for how it can build on its revenue growth and continue to keep users engaged.

Founded by a Stanford dropout, the firm is widely considered an unlikely success story — especially given that it was once written off as an app mostly used for sexualized text messages.

But Snapchat found its audience, and a lot of that audience is pretty famous — Kim Kardashian is among its power users. Some have called the firm the “anti-Facebook” in that all of its messages and posts are temporary and are eventually washed away.

“In the way that the flashing cursor became the starting point for most products on desktop computers, we believe that the camera screen will be the starting point for most products on smartphones,” the company wrote in the filing. “This means that we are willing to take risks in an attempt to create innovative and different camera products that are better able to reflect and improve our life experiences.”

Snapchat will likely be the biggest IPO the tech sector has seen since Alibaba put in an IPO about two years ago. That was a much larger offering — $22 billion — with Facebook coming in second at $16 billion.

The filing also indicates that Snapchat has 158 million daily users and earned $404.5 million in sales in 2016, way up from $58.7 in 2015.

However, The Wall Street Journal noted that in order for the company to sustain its revenue growth going forward, it will may have to rely on the scale that relationships and media partnerships can deliver.

So far, Snapchat has been a big hit with teens, and younger users are a major strength. But those users are so concentrated between ages 18 and 34 that most believe Snapchat will have to branch out some if it really wants to see success in public markets.

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