Snap Inc. is planning to go public with an initial public offering (IPO) on the New York Stock Exchange, five years after the launch of its popular app Snapchat. The company filed for an IPO on Thursday, Feb. 2.
Snap Inc.'s Market Position
According to USA Today, the parent company of popular communications application Snapchat, Snap Inc., filed public regulatory documents for IPO, showing that the company has reached maturity. Snap has reached 158 million daily users. The company also states that 60 percent of its users create daily Snaps for a total of around 2.5 billion videos and photos created daily from within the Snapchat app.
The company aims to raise $3 billion IPO as support for its growing strategy. Snap Inc. reported that it has now a workforce of around 1,800 employees. Its revenues went up from $58 million in 2015 to $404.5 million for 2016.
Snapchat, the company's communication app focused on sharing photos and videos, has been a real market success. However, not all its business numbers are positive. Snap has lost $514.6 million in 2016 and $1.2 billion total since its launch in 2011.
Snap Inc. co-founders Bobby Murphy and Evan Spiegel were paid $503,000 and $2.4 million respectively in 2016 and both have 21.8 percent of the Snapchat shares. The company has been launched in 2011 from a Stanford University dorm room. Snapchat has been a rapidly evolving app and social network.
Today, Snapchat has become widely popular with young adults, aged in the range 18 to 24. Statistics show that group age is spending around 30 minutes per visit and use to come to Snapchat 20 times monthly. Users 25 and up are spending only 20 minutes on the app monthly and use to come only 12 times per month.
The Venice, California-based company comes with the concept of sharing photos and videos that disappeared within 10 seconds. Since its initial launch, Snap has transformed into a communications platform for young people to discover video content from various publishers such as CNN, Tastemade and Cosmopolitan, create "Stories" of their day based on a string of videos and photos and watch news based on video submissions.
Most recently, with a fast-paced recap/commentary series based on ABC's "The Bachelor," Snapchat has involved into original programming. Thanks to its new product, Spectacles video glasses, Snap Inc. now calls itself a "camera company." The IPO filing comes at an exciting but challenging time for the company.
Snap's IPO Will Support Company's Strategy
According to The Verge, rather than just an app developer, Snap aims to become "a camera company." Its Spectacles gadget already found some market success. The device is a pair of video-recording sunglasses.
Snap's advertising business is also growing quickly. However, as a business strategy for the next step in its development, the company plans to invest more in hardware. The IPO comes to support that growing strategy.
Following the IPO, Snap will have a dual class stock structure consolidating control among a few key executives, like many of its Silicon Valley peers. Because they control a substantial majority of our voting stock, the two co-founders of the company will keep their control over all stockholder decisions. The co-founders' voting control will not be diluted by the Class A common stock issued in this offering because this type of stock has no voting rights.