Snap Inc, operator of the Snapchat virtual messaging app, has announced its initial public offering (IPO). Its plan to raise $3 billion, giving itself a valuation of up to $25 billion, makes it the biggest offering since Chinese e-commerce giant Alibaba floated in the US in 2014.
Given the reluctance of other so-called ‘unicorns’ (private companies valued at $1 billion or more) to float, as taxi hailing app Uber and Airbnb say they want to remain private for the time being, it is hotly awaited.
However, it has also been accused of over-valuing itself, and investors are raising concerns that they will get no say on the running of the company. Snap says its IPO will be the first to offer shares with no voting rights at all.
In terms of valuation, concerns centre on the company’s widening losses and when, or if at all, it will become profitable. There are also fears about Snap’s shifting business model. It started as a social media app that allowed users to send messages that disappear after 10 seconds. That quickly caused controversy as so-called ‘sexting’ hit the headlines.
Since then Snapchat added more functions including the ability to add longer-lasting collections of photos called ‘Stories’ and a platform for publishers called ‘Discover.’
However, in its IPO filing, Snap called itself a ‘camera company.’ It has already launched sunglasses named ‘Spectacles’ that allow users to record videos on the move, and the company may see its future in the hardware as well as the software market.
When considering the valuation, it is worth comparing Snap with Facebook and Twitter, two of its main competitors.