Snap Inc, the parent company of Snapchat, will be going public on the NY stock exchange this Thursday. At first, Snap Inc.’s value was estimated to be $19-22 billion but is now believed to be around $24 billion since it is $17 a share. Per an unnamed source, Snap Inc.’s shares could have been as much as $19 per share, but they agreed on $17 because they wanted to target mutual funds for long term investments.
Sadly, 2016 was an extremely slow year for U.S IPO’s, Snap Inc going public is the highest anticipated tech IPO’s since Alibaba in 2014. It is also going to be one of the richest investments since Facebook back in 2012.
Despite the excitement for this stock to go up, there are still problems with Snap Inc. Net loss over 38% in the last year, how the company will be able to create a profit, and the fact that daily active users seem to be on the decline are just three of the concerns investors have.
How fast Snap Inc. growing
Snapchat is one of the most popular apps used to this day, but their growth began to slow in the last couple of months of last year after Instagram, run by Facebook, launched a copycat of Snapchat’s stories. Despite that, Snap’s sales are growing at an alarming rate, growing up to almost $400 million in 2016 from $58.7 million in 2015. Many analysts say that Snapchat will be worth around $1 billion by the end of the year.
The downfall
The company is losing money quickly, though, a record-breaking $515 million, $142 million more than the year before. Snapchat is also losing users, having around 36 million active users in the first half of 2016 but going down to 15 million in the second half. Despite this, Snapchat still has a good pricing on it, but that will mean “very little” in the long term said Chi-Hau Chien, the managing partner at Goodwater Capital.
Comparison with competitors
Snapchat has been compared to Twitter, which, after it’s 2013 IPO, has only seen moderate increases in its user base and is now trading well under its offering price. Manager at Social Internet Funds, Lou Kerner, says that he is avoiding the offer after finding out Snapchat left out historical trends for user metrics, which he considers to be a bad sign.
