Since Los Angeles-based Snap Inc.'s launch of its successful mobile app Snapchat in 2011, founders Evan Spiegel, Bobby Murphy and Reggie Brown are now set to put the company forward with their last week's filing for an Initial Public Offering (IPO). This move is said to up the company's value to up to $25bn.
March 2017 is the target date of Snap Inc.'s official IPO launch. When this public offer hits off by March, Snap Inc. will be the 2nd highest valued company since 2014, with Alibaba still reigning at the top at $170.9 billion.
The media has been skeptical as to Snap Inc.'s sudden decision, which is right after Donald Trump was elected as U.S. President.
Some speculate that it may have been because under the current Obama administration, companies are able to file for an IPO in secret as long as they are valued at less than $1 billion. This is legal under the Jumpstart Our Business Startups Act. So it seems, Snap Inc. is not only testing the investment waters before going full-blown as an IPO company; it is also taking advantage of the current administration's company laws.
Although Snap Inc. is unreachable for comment as of this time, there are verified reports as to the company's recent IPO application at the U.S. Securities and Exchange Commission:
- Snap Inc. has chosen Morgan Stanley and Goldman Sachs Group Inc. to lead the company's public offering. Morgan Stanley is also known for leading Facebook's IPO back in May 2012.
- The company has also enlisted the assistance of JPMorgan Chase & Co., Deutsche Bank AG, Allen & Co., Barclays Plc and Credit Suisse Group AG as part of its advisory group.
- Snapchat has currently more than 100 million active users, with 60% aged between 13 and 24.
- Snapchat will be generating almost $1bn in advertising revenue by next year.
- Snapchat is expecting a valuation of $20bn- $25bn by March 2017.
- By October 2017, Snapchat is expecting to reach a valuation of $25bn- $40bn.
Snapchat is popular for its easy-to-use platform for sharing selfies and videos, with adjustable controls as to how long the message can stay in a sender and a recipient's inbox before it gets "deleted." The app has also released its face detection frames that have reached skyrocketing popularity due to social media sharing.
Recently, Snapchat launched its Snapchat Spectacles, a video camera sunglasses add-on that can take instant "snaps" wirelessly. This add-on can be connected to a smartphone.