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Snapchat is going public with a US$3 billion IPO

By Koh Wanzi - on 3 Feb 2017, 6:00pm

Snapchat is going public with a US$3 billion IPO

Snapchat is finally going public. Snap, the parent company of the ephemeral picture messaging app, has revealed plans for an initial public offering (IPO) that would reportedly value it at over US$20 billion.

The IPO filing on the New York Stock Exchange is one of the most prominent stock debuts in recent memory, and may even be the largest US-listed technology IPO since Alibaba debuted at a US$168 billion valuation in 2014.

Snap hopes to raise US$3 billion from the IPO, on the back of what it says are 158 million daily active users. That sounds like a lot, until you consider the fact rival Instagram Stories boasts a similar figure. Its 2.5 billion daily Snaps also pale in comparison to giants like WhatsApp, which handle a whopping 60 billion messages every day.

That said, the IPO comes at a challenging but interesting time for the company, which has to prove that it has the staying power for the long haul. For starters, the company doesn’t want to be known as a social media firm or even a messaging service. Instead, it is a camera company.

“We believe that reinventing the camera represents our greatest opportunity to improve the way that people live and communicate,” Snap said in an S1 filing ahead of its IPO.

Snap will need to find a unique selling point for itself, especially with Facebook and Instagram breathing down its neck with features unabashedly lifted from Snapchat. Instagram has Instagram Stories, while parent company Facebook recently rolled out Snapchat-style filters in Messenger. It is even testing its own version of Snapchat Stories called – yes, you guessed it – Facebook Stories in Ireland.

Furthermore, Snapchat even said in the filing that its daily active users may not continue to grow, with growth being relatively flat in the quarter that ended in September 2016.

That is not what a promising growth story or investment sounds like, and analysts think Snap may choose to highlight the growing engagement numbers of its core audience.

Finally, the company will not be selling any voting shares, so co-founders Evan Spiegal and Robert Murphy will retain total control.

Source: The Guardian

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