With Millennials and Revenue on its Side, Snapchat Moves Toward Massive IPO

Snapchat CEO Evan Spiegel’s brain-child may have been first conceived in his Stanford fraternity house, but the now-dominant social photo-chat app has done a lot of growing up since those early days. Now, with an estimated company value of $25 billion, Spiegel’s Snapchat has recently inched closer than ever to making one of its biggest steps yet: going public.

Snap inc., the private parent company of Snapchat, is said to have recently appointed big-name banks like Morgan Stanley and Goldman Sachs to head up an IPO that could list as early as March 2017. Going public would be a marked change for Snapchat, making Facebook’s attempt to take over the app in 2013 for just $3 billion seem like pocket change.

If the IPO lists on the New York Stock Exchange, the Los Angeles startup-turned multimedia-conglomerate will be the largest share sale on a U.S. market since 2014. Such a landmark can be explained by Snapchat’s popularity with millennials – 235 million of them per month to be exact, estimates Bloomberg.

Snapchat’s debut on the public market will rank it with the likes of Uber and Airbnb in a category of companies known as “unicorns,” which are companies valued at more than $1 billion.  This status could result in an overhaul in terms of user experience and branding, as Snapchat will segment its position among the other 21st century “unicorns” that have captured millennials’ attention and investors’ bank accounts.

Snapchat’s quick ascension to the top of the app revenue food chain can be attributed almost entirely to in-app advertising sales. CNBC reported that Snapchat’s ad revenue will reach $1 billion alone in 2017, and the app announced in June that it would be launching its first ever advertising programming interface (API). With the API in place, users are exposed to advertisements in between viewing “snaps,” or the pictures themselves.

Additionally, it has become clear that these advertisements haven’t deterred Snapchat’s users – Bloomberg has estimated the app is in the “top tier of time wasters” as its average user spends approximately ten minutes a day on the application in comparison to the 6.4 minutes spent on Instagram, another popular photo sharing app.

Yet, Snapchat’s center focus, and its biggest selling point for investors, is its monopoly on instant, social picture sharing unlike any other major photo-focused application.  Snapchat’s cornerstone digital “stories” capability was the first of its kind, and it has since been copied from Instagram and lauded by Facebook.

Snapchat’s most recent venture that some say has debuted in preparation for an IPO is Snapchat “Spectacles,” a Snapchat-branded version of Google Glasses that allows users to shoot live video and send recordings to their smartphones. Although wearable technology has not had enjoyed immense popularity in recent history, it could be a move in a futuristic direction for the company as an innovator of Google’s caliber.

If Snapchat’s current progression toward an IPO continues and its current valuation stays afloat, not only could its founders become multi-billionaires, but the app could become a pioneer in the emerging intersections of social media companies and business. Although the company’s representatives have not commented on the company’s plans for the IPO, investors can be sure that unlike the app’s trademark disappearing photos, Snapchat won’t be vanishing from the news anytime soon.

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