Snapchat parent company, Snap Inc., has just filed confidentiality for its initial public offering (IPO), according to reports.
News about a Snapchat IPO at a $25 billion valuation first surfaced back in October, and new reports now bolster such claims. The company is reportedly seeing to raise $4 billion, which would lead to a valuation of $25 to $35 billion.
The confidential filing with the Securities and Exchange Commission (SEC) means that the annual revenue Snap Inc. makes is lower than $1 billion, which would fall in line with its advertising estimates. Companies can secretly file for an IPO only if they make less than $1 billion, according to the U.S. Jumpstart Our Business Startups Act.
Snapchat IPO In March 2017
According to a separate report from Reuters, Snap's IPO could take place as soon as March 2017. By going public, Snapchat's parent company could get more capital to drive further growth and better position the company to compete against behemoths such as Google, Facebook and others.
Should this IPO prove to be fruitful, the company could soar to an impressive valuation far higher than what it's worth now and establish Snapchat as a staple product in the long run.
Snapchat was founded back in 2012 as a free mobile messaging app that enabled users to send ephemeral photos. The ephemeral aspect caught on and catapulted Snapchat to its current position with more than 100 million active users, most of which are aged 13 to 24. The age group that Snapchat taps makes the app a ripe territory for advertisers to target millennials.
Will Donald Trump's Presidency Affect Snapchat's IPO?
Snap Inc. reportedly filed for the IPO before the U.S. presidential elections, but it remains to be seen whether Donald Trump's victory could have a negative effect on Snapchat's outcome. According to Bloomberg, Snap thinks it's unlikely that it would affect the IPO, but it's taking precautionary measures nonetheless.
"While the company's management doesn't think a Trump presidency is likely to have a negative impact on the business, they will be closely tracking market volatility and could delay the IPO if needed, one of the people said," Bloomberg reports.
Snapchat vs. Facebook
For Snapchat, it would be preferable to have the IPO sooner rather than later, especially with completion heating up and Facebook closing in. Facebook has been trying to copy Snapchat features for a while now and has already launched a number of Snapchat tricks on its services, including a new WhatsApp status feature similar to Instagram Stories, which is a clone of Snapchat Stories. Facebook also started testing ephemeral photo messages and face filters recently, again "borrowing" ideas from Snapchat.
