Snap Inc could have one of the largest ever US tech IPOs

16 Feb 2017

Snap Inc pop-up store in New York, 2016. Image: NYCStock/Shutterstock

The value placed on a possible Snap Inc IPO has varied wildly, but now the company has revealed it will be at least $19.5bn, which would still rival the largest US tech IPO ever.

Earlier this month Snap, the parent company of Snapchat, finally confirmed what most of the financial world had anticipated, by filing an IPO on the New York Stock Exchange.

Estimates back in October suggested an IPO figure close to $40bn, which would have made it the largest US tech IPO ever, but the company has since revealed a more ‘modest’ value.

According to the The Wall Street Journal, Snap has set itself a valuation of at least $19.5bn, and up to $22.2bn.

This is lower than the estimated $25bn suggested during the run-up to its announcement, but would still put it within reaching distance of the largest US tech IPO ever, that being Alibaba’s IPO in 2014.

It would give Snap a share price of between $14 and $16, with a final IPO price to be decided once it has finished consulting with its investors today (16 February).

Final value in coming weeks

The high valuation of Snap should come as no surprise to those following its monumental rise to stardom. Its Snapchat app was estimated to have as many as 161m daily active users as of December 2016.

Unlike some other social media and messaging services, Snap has shown that it is actually making a considerable amount of money, earning $404m last year, up by 50pc on the previous year.

For 2017, it is expecting to earn more than double that, reaching $1bn, or 600pc of what it earned in 2015.

According to those familiar with Snap’s IPO, the company is meeting with major mutual and hedge funds to hash out its true evaluation, before moving on to New York, where it is expected that shares will be priced as soon as 1 March.

If it is to achieve its maximum value, Snap will need to convince its investors that it has the ability to grow alongside its major competitors, such as Facebook and Instagram.

Snap Inc pop-up store in New York, 2016. Image: NYCStock/Shutterstock

Colm Gorey was a senior journalist with Silicon Republic