Nima

Director of Client Relationships Responsible for the management & development of the easyMarkets client base as well the development of our IB partner program.

Snap, the parent company of the image messaging and multimedia app Snapchat, has filed to list on the US stock market, according to various reports.

Analysts say the California-based company would be worth between $20 billion and $25 billion, making it the largest initial public offering (IPO) since Chinese e-commerce giant Alibaba went public two years ago. It would also be the biggest US technology flotation since Facebook’s $81 billion IPO in 2012.[1]

Snapchat has enjoyed huge success since launching in 2012 as a mobile app that allowed users to send real-time photos that disappear within seconds. Snapchat currently has up to 150 million daily active users. By comparison, Twitter has less than 140 million daily active users despite being founded six years earlier.[2]

About 60% of Snapchat users are between the ages of 13 and 24, giving the company plenty of advertising appeal and growth potential. In September, the company rolled out its new video-camera feature, Spectacles. It also officially rebranded itself as Snap.

The app has resonated with youth, where it has enjoyed strong staying power and massive media attention. Evan Spiegel, Snap’s 26-year old founder, believes his company can reach new heights, having already turned down a multi-billion-dollar offer to be bought out by Facebook.

According to various reports, Snap filed a confidential application for an IPO with the Securities and Exchange Commission (SEC), the primary agency responsible for enforcing federal securities laws in the United States. While the company has already attracted large-scale investors, some of them have raised questions about Snap’s growth potential. Currently, Snapchat relies on advertising sales as its main source of revenue. For many business insiders, Snap’s monetization efforts will have to expand for the company to remain sustainable long-term.

Social media companies have received a lot of attention from investors over the years, but their performance in the market has been mixed. Facebook, the world’s largest social media network, has had a fantastic year. The same cannot be said about Twitter, which continues to struggle with expanding its network of daily active users. LinkedIn, the world’s biggest professional network, was bought out by Microsoft in June for a whopping $26.2 billion in cash.[3]

 

[1] BBC (November 16, 2016). “Snapchat ‘files for stock market float’.”

[2] Sarah Frier (June 2, 2016). “Snapchat Passes Twitter in Daily Usage.” Bloomberg Technology.

[3] Alex Hern and Jana Kasperkevic (June 13, 2016). “LinkedIn bought by Microsoft for $26.2bn in cash.” The Guardian.

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