Snapchat owner files for $3b IPO for a market value of $25b
new york — Snap, the maker of the disappearing photo app Snapchat, filed publicly for an initial offering, the first US social-media company to do so since Twitter more than three years ago.
The company filed with an initial size of $3 billion, a placeholder amount used to calculate fees that may change. Snap plans to raise as much as $4 billion in the IPO, people familiar with the matter have said, for a market value of as much as $25 billion.
The company’s net loss widened to $515 million in 2016, on revenue of $404 million, according to the prospectus filed on Thursday. That compares with a loss of $382 million in 2015, on revenue of $59 million.
Snapchat has more than 158 million daily active users, the prospectus shows. Quarterly average revenue per user on a global basis climbed to $1.05 in the fourth quarter of 2016, compared with 31 cents in the fourth quarter of 2015.
Snap plans to use proceeds from the offering for general corporate purposes, which may include acquisitions, the filing shows.
The company said it relies on Alphabet’s Google for most of its computing, storage and bandwidth, and any disruptions to Google’s cloud functioning could “seriously” hurt its business. Snap said it plans to spend $2 billion with Alphabet over the next five years to use Google’s cloudcomputing services. It also noted that because Snapchat is used primarily on mobile devices, it relies on Google’s Android operating system and Apple’s operating system, over which it has no control. Snap also competes with those companies.
Facebook, Twitter
In addition to Google and Apple, Snap named Facebook, including its WhatsApp and Instagram applications, and Twitter as significant competitors.
Last year, Snapchat filed confidentially for an IPO with the US Securities and Exchange Commission, under the Jumpstart Our Business Startups Act. The Jobs Act is a venue for companies with revenue of less than $1 billion to file privately and work out details with the SEC away from the public eye.
The IPO prospectus is the first opportunity for outsiders to get a closer look into a company that’s known for, among other things, its culture of secrecy. The next step will be the roadshow, in which chief executive officer Evan Spiegel and his management team will endeavour to explain the company’s strategy and prospects to potential investors. — Bloomberg