Snapchat poised to make debut with €23bn IPO
Published 17/11/2016 | 02:30
Messaging app Snapchat has filed for an initial public offering, which could see it make the biggest tech firm US stock market debut since Facebook.
According to sources familiar with the situation, the Venice, California-based company could go public as early as March and be valued between $20bn and $25bn (€18.6bn-€23.3bn), making it the largest IPO since Chinese e-commerce giant Alibaba Group Holding went public two years ago valued at $170.9bn (€158bn). It would be the largest tech IPO since Facebook's debut in 2012 with a value of $81.2bn (€75bn) .
Snapchat filed with the Securities and Exchange Commission under the US Jumpstart Our Business Startups Act. Companies with less than $1bn in revenue can secretly file for an IPO, allowing them to quietly test investor appetite while keeping financials confidential.
The filing was made before Donald Trump's unexpected victory in the US presidential election. This has increased uncertainty in global markets, but the Dow Jones Industrial Average has hit record highs for four straight sessions.
Snapchat was co-founded by Evan Spiegel and Stanford University friend Bobby Murphy in 2011, Forbes puts Mr Spiegel's wealth at $2.1bn (€1.9bn) - ranked 12th in the list of US entrepreneurs under 40. Mr Murphy (28) is at number 14 with $1.8bn (€1.6bn).
A spokesman for parent company Snap Inc declined to comment.
A Snapchat IPO is seen by many investors as a bellwether for many of the largest so-called "unicorns," private, venture-backed companies that are valued at more than $1bn. Nicknamed "decacorns," these companies are valued in the tens of billions of dollars and include Snapchat, car-sharing company Uber Technologies Inc and home-sharing company Airbnb. No decacorn has yet tested the public market, and it is unproven whether they can beat or even replicate such astronomic valuations with public investors.
The market for technology IPOs for this year has been rocky, due to volatile technology stock performance and uneven returns from recent IPOs. In the year to date, 123 US tech firms have gone public, raising $7.1bn (€6.6bn), a 58pc decline in proceeds and 20pc drop in the number of offerings from this time last year.
Snapchat started as a free mobile app that allows users to send photos that vanish within seconds. It has more than 100 million active users, about 60pc of whom are aged 13 to 24, making it an attractive way for advertisers to reach millennials.
Awash in venture funding, the company raised $1.81bn in May, which valued it at about $20bn (€18.6bn). But investors worry that Snapchat's advertising sales, which began last October, is the company's only significant revenue source.
Snap in September starting describing itself as a camera company and earlier this month it debuted its $130 video-camera sunglasses. The glasses are equipped with a camera that connects wirelessly to a smartphone to take and send "snaps" - the company's terms for video and photo messages sent on its app.
The company's investors include General Atlantic, Sequoia Capital, T Rowe Price and Lone Pine. Previous rounds included Fidelity Investment, Kleiner Perkins Caufield & Byers and Yahoo Inc. Earlier this month, Alphabet Inc's venture capital arm CapitalG, earlier known as Google Capital, disclosed an investment in Snapchat by adding the social networking firm's logo to a page on its investment portfolio website.