Snapchat set for flotation value of up to $25bn
Snapchat, the mobile messaging app that’s increasingly popular with teens and young adults, is set to become one of the US stock market’s most significant share listings in recent years.
Snap To Raise $3bn From SnapChat Floatation
The owner of the app, the Californian tech firm, Snap, has confirmed it plans to raise upwards of $3bn from the share sale, giving away a small chunk of equity in a company which is yet to even turn a profit.
The app, which allows Snapchat users to share brief messages and imagery that exist on recipients’ screens for only a matter of seconds, is expected to be valued between $20 and $25bn upon flotation. That’s despite announcing sales of $404m in 2016 and a loss of $515m.
Snap cited hefty investment in marketing and product and market research as the reason why its 2016 losses easily surpassed those experienced in 2015.
However, with over 160 million daily users of the app and revenue growth of 600% year-on-year, it’s perhaps unsurprising that the future of Snapchat is deemed bright by the US stock market.
Nevertheless, Snap has openly admitted that it anticipates incurring “operating losses in the future, and may never achieve or maintain profitability.”
Twitter, Facebook and YouTube Are Main Rivals
The shares that are on offer will not provide investors with voting rights in the company. This gives Snap’s founders, including Co-founder Evan Spiegel, continued operational control of the app’s future.
Facebook, Twitter and YouTube are cited as Snapchat’s primary market share competitors. Though Snapchat’s flotation plans have not gone unnoticed in Silicon Valley.
Facebook has recently unveiled new filters and slideshow functionality within its image-sharing app, Instagram.
Martin Garner, Insights Analyst at CCS, said: “A lot of people think Facebook is losing younger users to Snapchat.”
“But there’s a lot of evidence Facebook is copying Snapchat’s features.”
Nevertheless, Facebook’s broad appeal will be hard for Snapchat to compete with. Facebook still boasts 1.2 billion daily users and whether Snapchat can widen its own demographic appeal remains to be seen.
Snapchat has already demonstrated its desire to innovate after debuting its Spectacles – video camera sunglasses that allow users to tap a button and record up to 10 seconds of film to record the perfect memories.