Sign in. It’s quick, free and it’s up to you.
An account is an optional way to support the work we do. Find out more.
THE COMPANY BEHIND Snapchat has filed for what could be one of the largest tech IPOs (initial public offering) in years.
Snap Inc has said it’s seeking up to $3 billion (about €2.8 billion) in an initial public offering, a figure that could shift based on investor demand. That demand will help determine the price per share sought by Snap in the upcoming weeks.
Snapchat has millions of users, and Snap has built a thriving ad business on it. But the company has also made a lot of money — nearly $900 million (about €837 million) — disappear in the past two years.
The fast-growing social network boasts 158 million daily users. It lets people send photos, videos and messages that disappear a few seconds after viewing. It was created in 2012 by Evan Spiegel, who dropped out of Stanford University just three classes shy of graduation to focus on the app.
Spiegel, 26, is poised to become a multibillionaire, along with his former fraternity brother at Stanford, Robert Murphy, 28, who is also a company co-founder.
Each man owns 227 million shares of Snap stock, which was valued at $30.72 (about €28.50) per share nine months ago when the company raised $700 million (about €650.7 million) from a group of investors, according to its IPO documents filed yesterday. If Snap can fetch the same price in its IPO, Spiegel and Murphy each will be worth $7 billion (about €6.5 billion).
Snapchat is no longer just about disappearing messages. Over the years, it has added a ‘Discover’ section where a diverse group of publishers — including People, the Wall Street Journal, CNN, Vice and Food Network — post video-heavy stories aimed at millennials.
Another feature, Stories, lets people create a narrative from messages, videos and photos from the past 24 hours. It’s so popular that Facebook’s Instagram now has a version of it, too.
And then there are Lenses, which let people add animated overlays to photos and videos — animals, for example, or flower crowns and sparkly eyes. The company came under fire a couple of times for adding filters many saw as racist. One had slanted eyes and buck teeth commonly associated with negative Asian caricatures; another, which Snap called a Bob Marley filter, darkened people’s skin. Snap later got rid of the offending filters.
Big money
The highly anticipated IPO is expected to be the one of the largest since Alibaba Group went public in 2014. But Snap is better known than the Chinese e-commerce company, and so draws comparisons to the IPOs of Facebook and Twitter. Facebook raised $16 billion (about €14.9 billion) when it went public in 2012.
If its IPO matches the $30.72-per-share price obtained in its last round of financing, Snap would have a market value of about $30 billion (about €27.9 billion), based on the quantity of outstanding stock listed in its IPO documents.
Investors who snap up the IPO will be taking a gamble on a Los Angeles-based company that has lost $1.2 billion so far while growing rapidly. Snap had revenue of $404.5 million in 2016, up from $58.7 million in 2015. Its net loss was $514.6 million last year, up from $372.9 million the year before.
Facebook, on the other hand, was profitable in 2011, the year before its IPO, with net income of $1 billion (about €929.6 million). Twitter has never turned a profit.
Snap stockholders must also have near complete trust in the business acumen of Spiegel and Murphy. The co-founders will have controlling power over all matters at Snap through a special class of stock that gives them 10 votes for every share they own. The stock being sold in the IPO has no voting power, while another class has one vote per share.
The discriminating classes of stock designed to give final say to the company founders is similar to setups at Facebook, where CEO Mark Zuckerberg holds all the power, and Google parent Alphabet, where Larry Page and fellow co-founder Sergey Brin can override all other shareholders.
To embed this post, copy the code below on your site
Article says: ‘ $900 million (about €837 billion) ‘
Go home journal you’re drunk.
Consistently makes a loss. How is any company worth this amount in that scenario I have no idea. It’s all speculative pricing (gambling) of what it will be worth in the future. Invest at your own peril.
@Par Maher. – That whole paragraph is gobble-de-gook.
Not gobble-de-gook, it shafagoe!!!
Amazing how these guys get so rich from a stupid app that shares a picture for s few seconds mind boggles
$900million does not convert to €837billion proof read your articles …..
On a serious note why value it at $3billion i cant see the reasoning
@Is Mise jay: They’re only offering a portion of the company as far as I know, the company is valued at 25billion based off this offering!!!!
Silly stuff.
Ponzi scheme comes to mind ..
OMG, If they go public, does that mean all the pics I sent of my boobs on it go public too?
Don’t think I could cope with the embarrassment.
Dont think I would take the risk if oppertunity arose.
Maybe im too old still dont get Snapchat or its appeal .
Vapourware
I’ve never used Snapchat but the premise appears to involve a fleeting moment in time. Very similar to the future of the company. It has lost hundreds of millions since it launched.
Will anyone remember snapchat in 5 years I wonder? That said, the attention span of so many people has reduced to only a few moments so perhaps it will survive.
It will come out strong for about 4 months, hype will die down stock goes down down down
Snapchat is fun in extremely small doses, I find that people I follow on Twitter and Instagram rarely post on Snapchat. The ‘Discover’ section is nothing but unashamed Kardashian clickbait and probably the main revenue generator for the app…god help it if thats the case
Overrated app will flop in 6 months time . At least Snapchat CAO have Miranda Kerr when snap chat blows up the boy doing well for himself
have your say