Dive Brief:
- Snap Inc. filed new documents with the Securities and Exchange Commission, revealing that it plans to ask between $14 and $16 per share in an initial public offering expected to take place next month. This offering would value the company at between $19.5 billion and $22.2 billion.
- The company had said previously the range would be between $20 billion and $25 billion, according to The Wall Street Journal. A final price will be set in the coming weeks after Snap meets with investors.
- Final valuation will depend on how investors view specific issues, including a recent dip in the growth rate of new users, the competitive landscape and the fact that the stock offering is structured so that Snap's leaders will retain significant control after the IPO, per an earlier Journal report.
Dive Insight:
The Snap Inc. IPO is expected to be the largest tech offering in several years and could leave Snap flush enough with cash to quickly ramp up its platform through a combination of acquisitions and organic growth. This potentially rapid expansion will be welcome news for marketers, as Snapchat brings a strong user base of the younger consumers that brands covet. Additionally, a stronger Snapchat could bring more competition to the digital marketing landscape, which is currently dominated by just two players: Google and Facebook.
It will be crucial for Snapchat to continue to attract new users at a healthy pace for the IPO to be deemed a success. Currently, the platform boasts 158 million users. However, its user growth slowed significantly late last year.
If history is any lesson, social media platforms often have a rocky go of it following an IPO. Both Facebook and Twitter experienced fluctuations in their stock value in the months after going public. Facebook was eventually able to stabilize the situation based on its strong performance but Twitter continues to struggle with delivering growth, both in its user base and stock value.
