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Snapchat to Fetch Billions in IPO

Paul Rubens - November 16, 2016 - 10:21 AM
Snapchat to Fetch Billions in IPO
The four year old company is to be floated on the stock exchange with a likely valuation of more than $20 billion.

(CCM) — Snapchat founder Evan Spiegel looks set to become the latest technology startup multimillionaire according to a Wall Street Journal report that parent company Snap Inc. has filed for a stock market flotation. Snapchat will likely be valued between $20 billion and $25 billion, meaning the sale — if it goes ahead — will be the second-largest U.S. technology company flotation since Facebook's $81 billion launch in 2014. Facebook offered to buy the then-one-year-old Snapchat from Spiegel for $3 billion in 2013, but since then, the company has evolved from a service that offered disappearing messages to become a social media and publishing platform in its own right. More recently, Snap has become a hardware vendor as well with the launch of its video-recording Spectacles product.

One reason for the company's high valuation is that Snapchat's users are predominantly young, making it an attractive proposition for advertisers seeking to reach the lucrative youth and young adult market. Over 150 million people use the service daily, including 41% of all 18 – 34 year-olds, according to Nielsen. The company's main source of revenue is the sale of advertisements that are placed among stories contributed by media partners and video diaries posted by Snapchat users.

Image: © dennizn - Shutterstock.com
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