Snapchat’s IPO by the Numbers

The moment of truth is near for Snap Inc., the company behind Snapchat.

Snap is set to officially reveal the price of its shares Wednesday after the close of the markets, with trading in earnest to begin Thursday morning between 11:00am and 11:30am ET.

The company has been trying to shore up support for the public offering with presentations targeting potential investors during its recent roadshow. Information revealed during those presentations, as well data as the public S-1 filing from earlier this month, gives us some first ideas about the health of the company, and how it compares to some of its direct competitors.

Here are some of the most important numbers to know about Snap’s IPO:

Share price and valuation: Snapchat is expected to price its shares between $14 and $16, and the company plans to sell 200 million Class A shares. This could help it raise as much as $3.2 billion, with the company’s valuation ranging from $19.5 billion to $22.3 billion.

Snapchat lowered its target valuation ahead of its IPO roadshow, in part due to investor concerns about slowing growth and competition from Instagram. With a lower share price, Snapchat wants to make sure that there is enough demand for a successful first day of trading.

How it compares: Facebook priced its shares at $38 when it went public in 2012, and Twitter went public at $26 per share. But while Twitter ended its first day of trading at a healthy $44.94, Facebook was virtually flat with a share price of $38.23, which analysts attributed to a too-high share price — something that Snapchat is now looking to avoid.

Revenue: Snap generated $404.5 million in revenue in 2016, up significantly from just $58.7 million in 2015. The company’s average revenue per U.S. user during the last three months of 2016 was $2.15.

How it compares: Snapchat is a growth company, and it really only began to monetize its users later in 2015 — so it’s no surprise that the company’s overall revenue is far behind its competitors. Facebook’s 2016 revenue was $26.9 billion, while Twitter generated $2.5 billion in revenue.The big question is whether Snap will turn out to be more of a Twitter, or a Facebook: Twitter’s mobile revenue per user in North America was $16.89 in 2016, while Facebook generated a whopping $70.12 per user in the U.S. and Canada for the same year.

Losses: Snap’s 2016 net loss was $514.6 million. In 2015, the company lost $372.9 on a net basis.

How it compares: It’s expected for Snapchat to lose money this early on in its growth cycle, but the rate of Snapchat’s losses has some concerned, especially if one compares it to pre-IPO Facebook: The social networking juggernaut already generated $1 billion in net income in 2011, the year before it went public. Twitter on the other hand had losses before going public in late 2013, but those were a lot more manageable. In the first six months of 2013, Twitter had a net loss of $69.3 billion

Usage metrics: Snapchat had 158 million daily active users during the quarter ending December 31, and 161 million daily active users in December alone. Usage growth has slightly decelerated during the second half of 2016, but the company is attributing it to seasonality as well as problems with its Android app. And even with those issues, but Snapchat’s daily user numbers still grew by 46 percent year-over-year.

How it compares: Facebook had 1.23 billion daily active users in December. The company’s daily actives grow a lot slower than Snapchat’s these days, but still came in at an impressive 18 percent year-over-year. More importantly, Instagram’s numbers still continue to climb as well. Instagram Stories, which is essentially a copy of Snapchat’s Stories feature, is now being used by more than 150 million people every day, making it a potent Snapchat competitor in its own right.

Demographic: The biggest thing that Snapchat has going for it is its young, valuable demographic, which is highly engaged with the app. Snapchat users under 25 spend 30 minutes every day on average in the app, and open it 20 times a day. However, there’s a flipside to these numbers: People over 25 only open it 12 times a day, and spend 20 minutes in the app, suggesting that users may grow out of the app. Moreover, the majority of Snapchat’s users is between 18 and 34 years old.

How it compares: Snapchat reached 70 percent of all 18- to 24-year-olds in the U.S. during Q4, according to MoffatNathanson, but only 23 percent of all users over 35. In comparison, Facebook reached 88 percent of all people over 35. The big question is whether Snapchat will be able to grow its demographic beyond its core audience to capture more ad dollars.

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