While you were anxiously awaiting to see who would become the next President of the USA, Snap Inc., the parent company of Snapchat, was filing for an initial public offering (IPO) on the US stock market. Based on investments in the company so far, the company would be worth between $20 billion and $25 billion. The IPO could come as soon as March 2017.
The sources who reported this news said that Snapchat’s parent company has filed a confidential application for an IPO with the Securities and Exchange Commission, thanks to the US 'Jumpstart Our Business Startups Act', companies with less than $1 billion in revenue, including Snap Inc., can secretly file so that they can get an initial reaction from investors, while keeping their finances confidential.
Digital companies, including Twitter and Snapchat, that rely on advertising revenues, worry investors who sometimes struggle to see how they’ll get back their money. Snap Inc., two months ago, launched ‘Spectacles’, which it sells for $129. This could be the company’s first attempt at offsetting investor’s worries that advertising is the companies only form of income.
If the IPO pays off, Snap’s founder, Evan Spiegel, should be pleased; just three years ago he turned down an offer from Facebook’s Mark Zuckerberg to buy Snapchat for $3 billion, six times less than what it could be worth.