Dive Brief:
- Citing several people familiar with the matter, The Wall Street Journal reported Thursday afternoon that Snapchat’s parent Snap Inc. is working on an IPO for as early as late March next year that could place the value of the company at $25 billion or more.
- While there is no guarantee an IPO will take place, it could be the biggest in several years if it goes through, underscoring just how quickly Snapchat is growing as well as signaling the possibility of renewed interest in digital marketing-related investment.
- A successful IPO could leave Snapchat flush with cash that it could invest in infrastructure, including further building out its services for marketers.
Dive Insight:
Speculation about a Snapchat IPO has been rampant for months. The Journal report lends new credence to those rumors by citing sources who say the necessary paperwork is being worked on.
Snapchat is one of the biggest success stories in digital this year as its user base quickly expands and more marketers jump onboard to target its audience of mostly younger consumers. Snapchat has approximately 60 million daily active users in the U.S. and Canada, making it more popular than Twitter.
The platform's ad revenue, which is where it makes most of its money, is projected to grow from $59 million in 2015 to $367 million this year, $936 million in 2017, and $1.76 billion in 2018, according to a recent forecast from eMarketer. Popular marketing offerings include location- and event-based geofilters, lenses and ads that appear in between content from media partners.
The growth has come even as marketers continue to struggle with measuring the success of their Snapchat efforts, underscoring just how intent marketers are to get in front of millennial and Gen Z consumers.
Even with this growth, the $25 billion or more figure is eye-catching, especially as Snapchat’s most recent valuation came in at $17.8 billion and it is still not known if the company is even profitable, according to the Journal. High-value technology stock offerings were more common several years ago, but have fallen off in the past 12 to 18 months as investor interest cooled, in part because several of the companies that went public were struggling, including Twitter, GoPro and Grubhub, which have all seen their value drop since going public.
The infusion of cash from a public offering could help Snapchat strengthen its role in messaging, digital content and marketing at a time when a major competitor — Twitter — is struggling. Twitter’s stock took a tumble today after several reports suggested Google and Disney would not pursue an acquisition of the company.
Snapchat might also use the money to acquire new technology, such as in the augmented reality or virtual reality space, per the Journal. Snapchat recently introduced its first-ever piece of hardware in the form of Spectacles — sunglasses that also serve as a video recording device that can synch wirelessly up to mobile phones.
