The disappearing picture message service will likely be valued at up to $25bn, cementing co-founder Evan Spiegels status as one of the richest people in tech
Snapchat is going public. The company that owns the disappearing picture message service revealed plans for an initial public offering (IPO) late Thursday, plans that are likely to value the loss-making five-year-old company at between $20bn and $25bn.
The IPO of Snap Inc will be one of the highest-profile stock debuts in recent years and is likely to be the largest US-listed technology IPO since Chinese e-commerce company Alibaba made its debut at a $168bn valuation in 2014.
The sale will cement co-founder Evan Spiegels place as one of the richest and most influential people in tech. Spiegel, 26, is a Stanford University dropout who started Snapchat while still at college. Before the IPO announcement, Forbes estimated his net worth, thanks to his Snap holding, at $2.1bn. On Thursday CNBC estimated his stake would be worth $5bn, the same as co-founder Bobby Murphy.
The sale will be an unusual one. The company will not be selling any voting shares, allowing the companys founders to keep total control of Snap Inc even after raising money in the public markets. Companies including Alphabet, owner of Google, and Facebook, have voting structures that give more rights to founders but it is highly unusual to not sell any voting shares.
Snaps Thursday filing with the Securities and Exchange Commission gave potential investors their first detailed glimpse into the companys finances. The company had 158 million daily active users on average in the quarter ended 31 December 2016, up 48% from the same quarter ended 31 December 2015.
Revenues, mostly ad sales, have grown fast. In 2016 Snap took in $404.5m, up from $58.7m in 2015. But losses more than wiped out those gains. The company reported a net loss of $514.6m for 2016.
Snapchat is a messaging service that allows people to send videos, photos or other messages using face and voice changing filters. It has partnered with media companies and celebrities to provide other mobile content on its Discover service. The company recently diversified into selling Spectacles, video capturing sunglasses that became one of the hottest products of the holiday season.
Facebooks Mark Zuckerberg has attempted to buy Snapchat on several occasions and was publicly rejected by Spiegel in 2013 after the social network billionaire offered $3bn for the company. At the time Snapchat had 5m active daily users. Snap Inc has been seen as a key rival for Facebook and appeals to a younger demographic than the maturing social network.
However Facebook has taken several steps to head off the threat and in its IPO filing the company acknowledged that it faces significant competition from companies including Facebook.
For example, Instagram, a subsidiary of Facebook, recently introduced a stories feature that largely mimics our Stories feature and may be directly competitive, Snap said in its filing.
Facebook has also adapted its Messenger app so that the camera is more easily available and has Snapchat-like lens filters, another nod to Snapchats format.
Read more: www.theguardian.com