Snapchat Owner Seeks $3B In IPO

Feb 05, 2017, 01:17
Snapchat Owner Seeks $3B In IPO

Snap is looking to raise $3 billion in the IPO, according to the SEC filing. According to the S1 documents in the filing, Snap seeking $3 billion when it goes public and will value itself between $20 and $25 billion. It had $404.5 million in sales in 2016, up from $58.7 million in 2015. According to the prospectus, he owns 227 million shares of the company, a stake that was worth US$3.7 billion (S$5 billion) at the end of past year. Advertisers were taken by its popularity - its February 2 prospectus reveals that between 2011 and 2012, its average daily user count grew from 1,000 to a million and by the end of 2016 that figure had spiked to 158 million.

In some ways, Snap does look like Facebook. At just over $1 per user per quarter, that's in the same ballpark as Facebook when it went public in 2012, and Mark Zuckerberg's $385 billion giant has pushed that up to almost $5 in the most recent quarter. If our users or partners are not able to access Snapchat through Google Cloud or encounter difficulties in doing so, we may lose users, partners, or advertising revenue.

Over the next five years, the company behind Snapchat will pay Google at least US$2 billion in cloud bills. The bad news? The company is not yet profitable; in fact it lost a whopping $514.6 million previous year.

Snapchat's parent company, Snap Inc., settled an intellectual property lawsuit for $157.5 million in 2014, which was revealed in documents filed with a government agency Thursday. Snapchat's competitors are nearly exclusively responsible for that decline.

In Snap's S-1 filing, the company announced a license platform agreement it struck with Google for its cloud infrastructure services.

The company's chief executive is 26-year-old Evan Spiegel, and its chief technology officer is 28-year-old Bobby Murphy.

As is the nature of these kinds of filings, Snap has to admit that it "may never achieve or maintain profitability." Hmm.

For one thing, Snap is losing an absolute shitton of money.

Though the structure has drawn some criticism for not giving stock market investors the opportunity to have input, some people close to the company have argued that investors can "vote with their feet" by not buying into the IPO if they are not comfortable with the arrangements.

Media companies including CNN, Vice, ESPN, and Food Network also have used Snapchat's Discover channels to offer videos and headlines to fans.