Snapchat shook up the tech world on Friday when the public details of its gigantic IPO were finally released. The company – valued somewhere in the area of $25 billion – is set to be listed on the NYSE ticker as “SNAP”. It’s been thought of as an unusual move by the CEO of parent company Snap Evan Spiegel, who has been a notoriously private business owner for years. Though a huge risk for Spiegel, it appears that he feels confident considering that the structure of his salary closely resembles that of Facebook’s Mark Zuckerberg.
The IPO itself is a massive public filing, which is referred to as an “S-1” and details essentially every aspect of the business. The purpose of the IPO is to provide Snapchat with the opportunity to raise an additional $3 billion for future business purposes.
The details of the file provide not only a glimpse of the important numbers, but also of the company’s uniqueness. For instance, Snapchat openly uses the phrase “sexting” when describing the progression of the platform. For a process that involves a great deal of stipulation, including such a term is somewhat of a bold move. The company also added in some sparkly visuals that serve to make the document look and feel much like the platform itself.
Key figures of the report include a hefty 158 million daily users (now reportedly more than Twitter), and a revenue increase of well over $345 million. Considering that Snapchat is a free service, these numbers are certainly impressive.
The significance of the IPO is that it reinforces the presence of tech companies, proving them to be major players in public trading. The price of the Snapchat stock estimates to be very high based on the substantial valuation of $25 billion. For Snapchat, such a high stock price puts them well ahead of competitor social networks Facebook and Twitter.
Though the IPO is noteworthy and impressive in size, going public also reveals many of Snapchat’s potential risks moving forward.
Firstly, the longevity of the platform is a major risk as with most companies in the fast-paced, consumer-driven tech environment.
Profitability is also a hot-topic that was candidly revealed in the report. Spiegel and the Snapchat team have stated that the company may never be able to sustain or even reach profitability. This provides an obvious dilemma for investors counting on growth in the competitive social media market.
On that note, the ever-changing market share is a major point of contention for Snapchat. Facebook, Instagram and Twitter are always battling to capture the biggest audiences in new, creative ways. Taking the company public and releasing the report is a clear indicator of Spiegel’s confidence in the platform, however he’s jumping into a volatile environment for investment.