Snapchat IPO: Video Sharing Company Snapchat To Go Public With IPO Worth $20 Billion
Makers of Snapchat video and image sharing app, Snap Inc., may soon be worth more than $20 billion.
Snap Inc, the company that brought you disappearing messages and puking rainbow filters is working out an IPO worth close to $20 billion.
According to a company filing on Thursday, Snapchat’s parent company is looking to price its upcoming initial public offering at between $14 and $16 a share.
At the end of the Snapchat IPO, Snap Inc would have a market value of more than $22 billion.
Snap would also be the biggest U.S. tech IPO since Facebook which went public in 2012 with a $104 billion valuation.
The Snapchat IPO would be almost double the value of Twitter which currently has a market capitalization of about $12 billion.
The pricing is not final, but it’s the clearest indication yet that Snap is seeking a lofty valuation despite investor concerns.
According to the company filing, Snap will be using part of the IPO proceeds to acquire complementary businesses.
The statement said:
“We may also use a portion of the net proceeds to acquire complementary businesses, products, services, or technologies.
“However, we are not contemplating any material acquisitions at this time.”
Snapchat IPO To Raise $20 Billion
According to Snap Inc’s original IPO filing earlier this month, the young company saw user growth slow to a halt in the second half of 2016.
The slowdown seems connected with Facebook’s Instagram launching a Snapchat-like feature which allows video calling.
Snap’s sales are growing at a fast pace, rising to more than $400 million in 2016 from just $58.7 million in 2015.
Most analysts expect Snap to report around $1 billion in sales this year.
That would mean Snap hopes to be valued at more than 20 times its sales.
Although Snap continues to struggle to make money — signalling that it may not be turning a profit any time soon.
Snap Inc suffered losses of $515 million in 2016, up from a loss of $373 million the year before.
The company could end up raising close to $3.7 billion from the public offering if it prices at $16 per share.
Those funds would give Snap greater ability to compete for talent and acquisitions against larger Tech companies like Facebook.