The IPO market has been pretty dormant this year, mostly because of a lack of tech companies willing to go public. That might change pretty soon, though, and the market might get a big shot in the arm from one of its highest valued companies.
Snapchat, or Snap, as it has been known since it changed its name a couple of weeks ago, could be going public as soon as March of 2017, according to a report from the Wall Street Journal on Thursday. It is said to be preparing the paperwork for an IPO, including its S-1, though it hasn't yet hired any banks.
The IPO would potentially value Snap at $25 billion. When Snapchat last raised funding, a $1.8 billion round in May of this year, had valued Snapchat at $20 billion; it had been valued at $16 billion last year.
VatorNews reached out to Snap for confirmation of this report, but the company would not comment.
"We aren't commenting on any rumors or speculation related to financing plans," a spokesperson for Snap told me.
Snap makes the majority of its money from ad revenue, and is growing by leaps and bounds year-over-year.
Leaked financials from earlier this year showed Snapchat growing its revenue by more than 8x from the beginning of 2015 to ehe end, going from $4 million Q1 to $33 million in Q4, for $59 million total.
According to the Journal, the company told its investors that it expects revenue of between $250 million and $350 million in 2016, and a report from eMarketer last month predicted that the company will see $366.69 million in ad revenue this year, and then $935.46 million in 2017.
Going from what it made in 2015 to what it generated in 2017, that would be a 1,485 percent increase in revenue in just two years.
Snapchat began its advertising push in 2014, when it started running ads in its Recent Updates section. n January of last year it launched the Discover feature, as a sway for editorial teams to put up their own Stories, which also, of course, include advertisements.
In an interview with Adweek in 2015, Snapchat CEO Evan Spiegel outlined what he saw as some advantages his company has over its competitors when it comes to advertising. That includes being able to put up full- screen advertisements, while the ads that others show are stuck inside a feed.
Another advantage, though it may not seem like one, is user anonymity. When Snapchat ads first arrived, the company made sure to not that they would not be targeted to specific users, as all of the other social media networks do.
Snap has also experimented with other ways to make money beyond advertising.
In November of 2014, Snapchat teamed with Square for the launch of a payments feature called Snapcash. The company has also attempted to make money from commerce, selling its users extra features, such as paid replays, which allow users to rewatch content for a fee. Not all of these efforts have worked out, though.
For example, the company launched the lenses store in November, charging users 99 cents to permanently buy one of 30 available lenses. Snapchat shut down the project in January, instead focusing on branding efforts. That is the same thing that it did with its Discover feature as well, selling sponsored channels.
Its most recent experiment in commerce, the one that necessitated its name change, was the release of Spectacles, sunglasses with an integrated video camera that makes it easy to create Memories.
Of course, there's no guarantee that Snapchat will go through with its plans to go public, but if it does, it will be the largest tech IPO since Alibaba went public in 2014 for $168 billion.
(Image source: adweek.com)