Snap Inc raises some eyebrows with possible $4bn IPO

27 Oct 2016

Snapchat app. Image: kenary820/Shutterstock

Snap Inc – recently rebranded from Snapchat – has already said it plans to launch its IPO in March 2017, but reports that it will be looking to raise $4bn would suggest its value could be as high as $40bn.

Despite the fact that Snap Inc – or just Snap – is already the darling of Silicon Valley, with companies clamouring to get a slice of the action, the owner of Snapchat will be looking to take the company to the next level with an IPO.

Revealed in October, Snapchat’s IPO is expected to take place in March 2017 with a previously estimated valuation putting the company close to $25bn.

Future Human

However, new information obtained by Bloomberg from those familiar with its upcoming IPO have said that Snap will be looking to raise as much as $4bn.

While the sources have said that this number can change, gathering this amount of money would certainly raise some eyebrows among tech investors, as it could push the company’s value as high as $40bn.

There is still a strong likelihood though that the value could still be between $25bn and $35bn as previously suggested.

Unlike some of the other tech IPOs that have happened in the relatively recent past, Snap’s one will differ because of its relatively low revenues.

As it makes less than $1bn annually, a source said that the company will file its IPO documents confidentially with the US’s Securities and Exchange Commission.

Privacy issues remain

Snap’s Snapchat app remains one of the fastest growing messaging powerhouses. It has 150m daily users and companies are already using it as an advertising tool, with different filter releases ahead of blockbuster films, for example.

It was also revealed in September that the company was getting into the hardware game, with its Spectacles that could record footage and upload it straight into the user’s app on the go.

One aspect that might put off some security-conscious investors, however, is a recent report from Amnesty International that found Snapchat to be one of the worst apps on the market from a privacy sense.

“[Snapchat] does not deploy end-to-end encryption and needs to do more to inform users about how the company is tackling threats to their rights – particularly as Snapchat’s ‘disappearing’ messages may give users a false sense of privacy,” the report said.

Snapchat app. Image: kenary820/Shutterstock

Colm Gorey was a senior journalist with Silicon Republic