×
You will be redirected back to your article in seconds

Snapchat IPO: Share Pricing Values Company at Up to $22 Billion

Snap Inc., the parent company of Snapchat, expects stock in its initial public offering to sell between $14 and $16 per share — valuing the company at $19.5 billion to $22.2 billion.

With that price range, disclosed Thursday in an SEC filing, Snap expects net proceeds from the IPO to be $2.1 billion (or $2.3 billion if the underwriters fully exercise their purchase options) at the $15-per-share price. It would raise up to $3.68 billion total at $16 per share. The company registered to sell 230 million shares, including 30 million that underwriters have the option to purchase.

By comparison, Facebook’s IPO in 2012 at $38 per share valued the company at $104 billion and Alibaba Group’s public offering two years ago gave it a valuation of nearly $170 billion.

Snap, based in Venice, Calif., has seen its revenue boom while its losses have also soared. Last year, it generated $405 million in revenue, up nearly seven-fold from the year prior, but posted a net loss of $515 million last year (versus a net loss of $373 million for the year ended Dec. 31, 2015). Snapchat had 158 million daily active users for the fourth quarter of 2016, an increase of 48% year over year (but up only 3% sequentially from 153 million in Q3).

Snapchat began life as a service that lets users send each other messages that evaporate within 10 seconds of the recipient viewing them, co-founded by CEO Evan Spiegel in 2011 when he was a student at Stanford University. If the IPO goes out at $16 per share, Spiegel would have a net worth of more than $4 billion.

The service has since expanded to include Stories — which disappear after 24 hours (and is a feature Instagram has successfully copied) — and Discover, a section for media content with partners that include ESPN, CNN, BuzzFeed, Comedy Central, the NFL, Vice Media and NBC’s “Saturday Night Live” and “The Tonight Show Starring Jimmy Fallon.” Last year Snap paid content partners $57.8 million under ad-revenue sharing agreements (up from $9.6 million in 2015).

Snap chairman Michael Lynton, an early investor in the company, last month quit as CEO of Sony Pictures Entertainment citing a desire to focus his attentions on Snap. Lynton has served on the Snap board since April 2013 and has been chairman since September 2016.

The company officially changed its name from Snapchat to Snap Inc. last fall, when it announced a line of video-enabled sunglasses called Spectacles. So far, the $130 video glass have not generated significant revenue, according to Snap. It now describes itself as “a camera company” and says in the company’s overview, “We believe that reinventing the camera represents our greatest opportunity to improve the way that people live and communicate.”

The company says Snapchat users create more than 2.5 billion messages and posts every day and that on average they visit the app more than 18 times per day, spending 25-30 minutes on Snapchat daily.

Along with its revenue and user growth, Snap’s workforce more than tripled last year. It had 1,859 full-time employees as of Dec. 31, 2016, up from 600 a year earlier.

Snap disclosed in its IPO filing that it has agreed to spend $2 billion with Google over the next five years for cloud services. In an update to the original filing, the company revealed a $1 billion commitment with Amazon Web Services over five years.

Snap generates the bulk of its revenue from North America. In Q4 2016, it had $165.7 million in total sales, and 88% of that ($145.4 million) was from North America; Snap reported $14.7 million in European sales and $5.7 million from the rest of the world for the period.

Snap has applied to list on the New York Stock Exchange with the symbol “SNAP.” The IPO’s lead underwriters are Morgan Stanley and Goldman Sachs.

More Digital

  • Colin Kroll Dead Vine Obit

    HQ Trivia and Vine Co-Founder Colin Kroll Dies at 35

    Colin Kroll, co-founder of the Vine video app and the HQ Trivia game, was found dead in his Manhattan apartment early Sunday of an apparent drug overdose, Variety has confirmed. He was 35. New York Police Department officers responded at 12:18 a.m. Sunday, Dec. 16, to a call by Kroll’s girlfriend, who was concerned about [...]

  • Nick Eh 30, StoneMountain64

    CAA Signs Gaming Influencers Nick Eh 30, StoneMountain64

    CAA has signed two popular live-streaming battle royale gamers — Nicholas Amyoony, better known as Nick Eh 30, and David Steinberg, aka StoneMountain64 — for representation. CAA said it will work to create opportunities for Nick Eh 30 (above left) and StoneMountain64 (above right) in all areas, including TV, motion pictures, touring, digital distribution and [...]

  • Amazon Adds NBA League Pass to

    Amazon Adds NBA League Pass Live-Streaming Games to Prime Video Channels

    Amazon is bringing pro hoops action to Prime Video Channels: The ecommerce giant now offers NBA League Pass as part of its lineup of 150-plus subscription options for Prime members in the U.S. It’s the first U.S. live-sports subscription service on Prime Video Channels. Prime members can subscribe to NBA League Pass via Prime Video [...]

  • Fifty Shades of Grey

    International Piracy Ring Stole Over 25,000 Movie and TV Digital Files, U.S. Feds Say

    A five-member international hacking crime ring stole more than 25,000 files for Hollywood movies and TV shows and illegally offered hundreds of them for sale online, according to U.S. law enforcement officials. A federal grand jury in L.A. on Wednesday (Dec. 12) indicted five men, identified as residing in the U.K., India, Dubai and Malaysia, [...]

  • Phil Schiller, Apple's senior vice president

    Apple to Update iPhones in China to Avoid Sales Ban

    Apple is pushing out a software update to iPhones in China to address a recent court order obtained by Qualcomm that banned the sale of certain iPhone models in the country. The update will allow the company to continue selling its phones in China, company representatives told Reuters Friday morning. The Fuzhou Intermediate People’s Court [...]

  • Kevin Reilly Variety Cover

    Kevin Reilly Named Content Chief for WarnerMedia Streaming Service

    Kevin Reilly — a veteran television exec who has led programming at NBC, FX, Fox, and most recently Turner Broadcasting — has been tapped to head content strategy for the still-nascent streaming service that WarnerMedia plans to launch next year. Reilly, who has led programming at Turner brands TNT and TBS since 2015, will serve [...]

More From Our Brands

Access exclusive content