Snapchat files for IPO with value up to $35b

A billboard displays the logo of Snapchat above Times Square in New York.
A billboard displays the logo of Snapchat above Times Square in New York.PHOTO: REUTERS

SAN FRANCISCO • Snapchat has filed for an initial public offering (IPO) that puts the messaging app a step closer to the biggest stock market debut in the United States since 2014.

The company could go public as soon as March and be valued at US$20 billion to US$25 billion (S$35 billion), making it the largest IPO since Chinese e-commerce giant Alibaba Group Holdings went public two years ago valued at US$170.9 billion.

It would be the largest US technology IPO since Facebook's debut in 2012 with a value of US$81.2 billion.

Snapchat filed with the Securities and Exchange Commission under the US Jumpstart Our Business Startups Act, sources said on Tuesday. Companies with less than US$1 billion in revenue can secretly file for an IPO, allowing them to quietly test investor appetite while keeping financials confidential.

A Snapchat IPO is seen by many investors as a bellwether for many of the largest so-called "unicorns" - private, venture- backed companies that are valued at more than US$1 billion.

Nicknamed "decacorns", these firms are valued in the tens of billions of dollars and include Snapchat, car-sharing company Uber Technologies and home- sharing firm Airbnb. No decacorn has yet tested the public market, and it is unproven whether such firms can beat or even replicate such astronomic valuations with more scrutinising public investors.

The market for technology IPOs this year has been rocky, with investors left skittish owing to volatile technology stock performance and uneven returns from recent IPOs.

Year to date, 123 US technology firms have gone public, raising US$7.1 billion, a 58 per cent fall in proceeds and 20 per cent drop in the number of offerings from the same period last year.

Snapchat started in 2012 as a free mobile app that allows users to send photos that vanish within seconds. It has more than 100 million active users, about 60 per cent of whom are aged 13 to 24, making it an attractive way for advertisers to reach millennials.

Awash in venture funding, the company raised US$1.81 billion in May, which valued it at about US$20 billion, media reports said at the time. But investors worry that Snapchat's advertising sales, which began recently, is its only significant revenue source.

Snapchat parent Snap in September started describing itself as a camera company and, earlier this month, debuted its US$130 video-camera sunglasses. The glasses are equipped with a camera that connects wirelessly to a smartphone to take and send "snaps" - the company's terms for video and photo messages sent on its app.

Earlier this month, Alphabet's venture capital arm CapitalG disclosed an investment in Snapchat by adding the social networking firm's logo to a page on its investment portfolio website.

REUTERS

A version of this article appeared in the print edition of The Straits Times on November 17, 2016, with the headline 'Snapchat files for IPO with value up to $35b'. Print Edition | Subscribe