Snapchat parent Snap Inc. is now looking to reset the clock for tech company IPOs, which have long been non-existent for U.S stock markets. The much-awaited IPO for the messaging (now hardware as well) giant was confirmed a couple weeks ago. But, the pricing bracket and expected valuation for the public offering had been missing on paper, until today.
According to documents filed with the U.S Securities and Exchange Committee, the company is seeking a price range of $14 to $16 per share. This updated filing also confirms that Snap is planning to sell 200 million Class A shares to individuals and investors who’ve been intrigued by the numbers put forth by them. Thus, it means that the company is planning to raise at least $3.2 billion from its initial public offering. Out of the total proceeds picked up by the company, it expects the liquid cash available to be around $2.1 to $2.3 billion. Rest of the capital would be digested (or distributed) among founders and other internal executives.
Further, we also need to address the big fat elephant called ‘valuation’ present in the room. According to Snap, the pricing now adds up to a top-line valuation of $22.5 billion — which is less than the oh-so widely rumored $25 billion. But, this falls in line with reports which predicted that the messaging company set itself a valuation of $19.5 billion to $22.5 billion.
This doesn’t necessarily mean that Snap is setting itself up for the lower valuation. The company is currently apprehensive about its user growth, which was rapid in previous years as compared to right now. The company’s exclusivity has now been marred by clones or others like Instagram who’ve shamelessly copied features from them calling it inspirational. Thus, it may be looking to make the offer attractive for investors by keeping the value of shares lower than expected.
But, it is still being believed that the company might be able to raise its valuation range if the market sees strong demand for the stock during its planned global roadshow. The execs of Snap are embarking on a journey across the globe to to convince investors to pour capital in their messaging company. And they might also try to show off their work in the hardware category, which is still at a very nascent stage. Snap is, however, said to be working on a pair of AR glasses for application in medical and healthcare industry.
Further, the company is going to be listed on the New York Stock Exchange (NYSE) under the symbol SNAP. The company is expected to announce the official price bracket on March 1.