Snap Inc., the parent company which now controls Snapchat and its newly announced hardware division, is reportedly looking for an IPO. According to a report in WSJ (subscription-only), the over 150 Million daily active users strong platform is eyeing a valuation of $25 Billion or more.
The company had recently unveiled a brand new identity under a new name — Snap Inc. Snapchat, the erstwhile company name and the popular social networking app now comes under Snap Inc. Apart from Snapchat, the company has already shown signs of getting heavily into hardware, with the launch of its own $130 hardware glasses called ‘Spectacles’.
Snap had recently raised a staggering $1.8 Billion in a Series F round, valuing the company at a whopping $20 Billion. The details of the funding were acquired via an SEC filing that states that the company has acquired the aforementioned amount in an equity offering. The company hasn’t revealed any valuation numbers in the latest round of funding, but TechCrunch has insider information that the funding took place at a $20 billion valuation.
So despite a fairly recent $1.8B round, why look for more money ? Well, for one, it is never bad too have more money, specially for a tech company and specially in times like these. All of Facebook’s brands (Facebook, Instagram, Whatsapp) are trying their level best to mimic Snapchat’s more popular features. And while Facebook itself has been repeatedly unsuccessful in gaining any momentum, Whatsapp and Instagram are claiming to have garnered fair amount of traction.
Snap would hence need a healthy warchest to continue to market its platform to current users and explore newer users. More importantly, even though Snap’s current user base is solid and loyal, it is hardly a tenth of what Facebook individually has, for Messenger and Whatsapp. While Snap has over 150 Million users, both Messenger and Whatsapp had individually crossed the 1 Billion user mark long ago.
Acquisitions of course, is the next logical step for a company with that much warchest. It has already, reportedly acquired Bitstrips, the makers of Bitmoji, for something in the vicinity of a $100 million.
The $25 Billion valuation however, shouldn’t be considered as a concrete number, for these pre-IPO valuations are subject to massive fluctuations, depending upon how banks price this IPO. Having said that, don’t be too surprised if Snap gets itself valued for that same amount or even more in this IPO, riding on strong revenue and user growth.
According to leaked docs accessed by TechCrunch, Snap Inc. is already projecting revenues of over $1 Billion by 2017, set to garner massive interest on the Wall Street.
To add on to that, user engagement on the platform is skyrocketing with marketers running after the company for advertising. You could see big news publications changing their social media profile pictures to ones which have the Snap icon behind, indicating the kind of influence this Los-Angeles based video messaging app has had.