Snap Inc, the parent company of the popular messaging app Snapchat, has set a valuation range for itself of $19.5 billion to $22.2 billion in its initial public offering. Though this is lower than the widely expected $25 billion valuations, it still earns Snap a spot as one of the biggest IPOs in recent years.
According to analysts, the conservation valuation is pretty apt amidst investor concerns over company’s slowing growth and metrics. Snap wants to ensure there is sufficient demand for shares of the company that it trades up on its first day in the public market.
The rally is basically between the two opposites- Facebook and Twitter. Investors have been pouring over the filing for Snap’s upcoming IPO to assess whether the still-unprofitable company will be the next Facebook, which is minting big bucks from its social media platform, or if it will be more like Twitter which is struggling to achieve the same goal.
In its filings earlier this month, the company recognised that Instagram’s “Stories” could cause its business to suffer. Last month, Instagram Stories reached 150 million daily active users—almost as many as Snapchat—which it had acquired in four months, where Snapchat took four years. Snapchat is adding new users, but its growth has slowed down.
Snap, which launched itself in 2012 with an app that sends disappearing messages, rebranded itself last year as a camera company and started selling $130 video camera glasses.
Snap is starting its “road show” today where it will pitch to investors as to why they should buy the stock. Reportedly, the company is expected to price its IPO after the US market closes on March 1.