Snap has filed an amended S-1 form with the U.S. Securities and Exchange Commission (SEC) regarding its initial public offering (IPO). Many are expecting Snap to come public later this week. What separates this IPO from the rest is that Snap is asking investors to buy shares that have no voting power, which has never been done before.
The company expects to price its 200 million shares (155 million from the company and 55 million from selling stockholders) in the range of $14 to $16, with an overallotment option for an additional 30 million shares. At the maximum price, the entire offering is valued up to $3.68 billion. The company intends to list its shares on the New York Stock Exchange under the symbol SNAP.
The underwriters for the offering are Morgan Stanley, Goldman Sachs, JPMorgan, Deutsche Bank, Barclays, Credit Suisse and Allen.
This company’s flagship product, Snapchat, is a camera application that was created to help people communicate through short videos and images. The company calls each of those short videos or images a Snap. On average, 158 million people use Snapchat daily, and over 2.5 billion Snaps are created every day.
On average, more than 60% of daily active users (DAUs) use the chat service every day to send Snaps and talk with friends. Snap benefits from the frequency with which its user base communicates with one another because each message invites a user back to the application when they receive a push notification. On average, DAUs visit Snapchat more than 18 times each day.
Snap detailed its finances in its filing:
Worldwide advertising spend is expected to grow from $652 billion in 2016 to $767 billion in 2020. The fastest growing segment is mobile advertising, which is expected to grow nearly 3x from $66 billion in 2016 to $196 billion in 2020. We believe that one of the major factors driving this growth is the shift of people’s attention from their televisions to their mobile phones. This trend is particularly pronounced among the younger demographic, where our Daily Active Users tend to be concentrated. According to Nielsen, people between the ages of 18 and 24 spent 35% less time watching traditional (live and time-shifted) television in an average month during the second quarter of 2016 compared to the second quarter of 2010.
The company intends to use the net proceeds from this offering for general corporate purposes, including working capital, operating expenses and capital expenditures. The firm may use a portion of the net proceeds to acquire complementary businesses, products, services or technologies. However, it does not have agreements or commitments for any material acquisitions at this time.