Snap Inc., the parent of the popular photo-messaging mobile application Snapchat, made it official on Feb. 2: The company has filed the requisite Securities and Exchange Commission S-1 affidavit and will go public next month as reported by eWEEK and other publications back in November.
The initial public offering, to be listed as SNAP on the New York Stock Exchange, could raise as much as $3 billion, potentially making it the largest U.S. technology IPO since Facebook Inc. raised $16 billion and debuted in May 2012 at a paper value of $81.2 billion.
Snapchat, which said in the IPO that is now has about 158 million users worldwide, could be valued at $20 billion to $25 billion or more, making it the largest overall initial public offering since Chinese e-commerce giant Alibaba Group Holding Ltd's (BABA.N) went public in 2014 valued at $170.9 billion.
Born in a Stanford University Dorm Room
The Venice, Calif.-based cloud-based application, whose parent company was born in a Stanford University dorm room in 2010, already has a substantial banking foundation, having raised $2.63 billion in eight funding rounds from 24 investors since 2011.
Snapchat is a mobile app that works on any mobile operating system and enables users, mostly teenagers—and then, mostly girls (70 percent of Snapchat's users are female)—add captions and colorful artwork to photos or videos and share them with friends. The pictures then disappear in seconds; the only way to retain the image is if the user quickly takes a screen shot.
Photos can only be sent in the moment—no uploading later. Young girls most often take pictures of themselves making silly faces, Carlos Danger-types may send more lascivious content, and then poof—the content is gone--again, unless the recipient saves a screenshot.
Handles About 2.5 Billion Photos Per Day
In its S-1 filing, the company reported that it facilitates about 2.5 billion photos daily created and shared among its subscribers.
Co-founders Evan Spiegel and Bobby Murphy each own 21.8 percent of the shares; they were paid $2.4 million and $503,000, respectively, in 2016, according to the S-1 report.
As do most developing IT software companies--and despite now-documented fast growth--Snap is in the red and has been since it debuted on May 1, 2011. In the S-1, Snap reported total losses in 2016 of more than a half-billion dollars ($514.6 million). The company also said it lost $373 million in 2016.
Snapchat's audience is young and loyal. The company said that users 25 and older visit Snapchat about a dozen times a day for a total of about 20 minutes. Younger users age 11 to 24 visit about 20 times daily for about 30 minutes, Snapchat said.
Reaches a Young Age Group
About 60 percent of Snapchat users are age 13 to 24, the company claims, making it an attractive way for advertisers to reach that age group.
Spiegel famously turned down an offer four years ago from Facebook to be acquired for $3 billion. The company's growth has been fast and steady; about 15,000 people now work for Snap in Los Angeles, New York, London, Paris, Toronto, Seattle, Ukraine and Sydney.
In 2016 and to date, 123 U.S. technology companies have gone public, raising $7.1 billion, a 58 percent decline in proceeds and 20 percent drop in the number of offerings from this time last year, Reuters reported.
In its last funding round, Snapchat raised $1.81 billion in May 2016, which valued it at about $20 billion.