Snapchat 'files for a $25 billion IPO'
But investors are 'wary' of the app's revenue sources
Snapchat could float on the stock market for up to $25 billion after confidentially filing for an IPO, according to Reuters.
The California-based picture messaging app's parent company, called Snap, is likely to go public as early as March 2017 and is valued between $20 billion to $25 billion, the biggest IPO since Chinese cloud giant Alibaba's floatation at $170 billion in 2014.
It would also be the largest IPO from a US tech company since Facebook went public in 2012, valued at $81.2 billion.
Snapchat has been able to file secretly with the Securities and Exchange Commission under the US Jumpstart Our Business Startups Act, according to anonymous sources speaking to Reuters. This allows any company with revenues of less than $1 billion to quietly test the market and investor interest while keeping the financials confidential.
The company first launched in 2012 as a means for users to send and receive videos that would then self-delete. The app is now more popular than Twitter, with more than 100 million daily users.
Given that almost 62% of Snapchat users are aged between 13 and 24, companies will see the app as a valuable platform for advertising to young people.
However investors have been left shaken after a turbulent year for tech IPOs. So far, 123 US tech companies have made public offerings collectively valued at $7.1 billion, a 58% decline from this time last year.
Despite attracting some major investors, such as Google's venture capital firm CapitalG, investors fear that advertising remains Snapchat's only significant revenue stream, according to Reuters.
Snapchat is one of the largest private and venture-backed companies in the US, valued in the tens of billions, alongside the likes of Uber and Airbnb.
The Total Economic Impact™ Of Turbonomic Application Resource Management for IBM Cloud® Paks
Business benefits and cost savings enabled by IBM Turbonomic Application Resource Management
Free DownloadThe Total Economic Impact™ of IBM Watson Assistant
Cost savings and business benefits enabled by Watson Assistant
Free DownloadThe field guide to application modernisation
Moving forward with your enterprise application portfolio
Free DownloadAI for customer service
Discover the industry-leading AI platform that customers and employees want to use
Free Download
