Technology - - Mar 02,2017
Amid increasing losses as well as sales, Snapchat with a market value of $24 billion priced its IPO at $17 a share scheduled to begin trading on the New York Stock Exchange on March 2.
Despite declining growth rate in the final months of last year, Snapchat is expected to raise $3.4 billion in IPO. This is the biggest U.S. tech IPO since Facebook.
In 2012 Facebook raised $16 billion through an IPO. Among California-based companies, Snapchat is only behind Facebook and Visa that raised more money through an IPO.
Snap, which is the parent company of snapshot had previously planned a range of $14 to $16 a share, but it valued its IPO at $17 a share. Trading is scheduled to begin on the New York Stock Exchange on March 2.
Snap has a market worth of nearly $24 billion.
Sales of Snap are increasing quickly, it was $58.7 million in 2015 and about $400 million in 2016. Snap’s sales are expected to be around $1 billion in 2017.
However, Snap continues to incur losses and has also signaled that profit might not come soon. The company suffered losses of $373 million in 2015 and of $515 million in 2016.
Snap witnessed a declining growth rate in the final months of last year mainly due to Facebook's Instagram launching a Snapchat type feature. The funds raised through the IPO will give it a better standing to compete against big companies like Facebook, Apple and Google for talent and acquisitions.
Analysts are hopeful about the potential of Snapchat as it has 158 million daily users and a majority of them in their teens or early adulthood.
Snapchat is essentially an image messaging mobile application and portal created by Bobby Murphy, Evan Spiegel and Reggie Brown, former students at Stanford University.
The Snapchat mobile app was launched in 2011, it differentiated itself from other messaging apps with a focus on image and disappearing messages. In 2013, Facebook made a bid for acquiring the company for $3 billion.