SnapChat has made a niche for itself in the collective mind- space of millennials and this could turn out to be its biggest asset. The business is all set to list on the New York Stock Exchange in a couple of weeks and it has a target valuation of $19.5 to $22.3 billion. It has an initial target valuation higher at $20 to $25 billion. The company revised the target after it came face to face with adverse feedback from investors. The main concern that the potential investors appear to have is that Snap claims that it is a better value investment than Facebook was at the time of its IPO. While Snap has not managed to convince investors fully of this claim, the brand does not appear to be unduly worried about this either.
Will CEO Speigel win over investors?
It appears that SnapChat is banking on its dynamic CEO Evan Speigel to win over the investors’ heart and wallets. There has not seemed to be any concerted effort to address the main points of the investors’ disenchantment with the IPO and this is strange considering that the skepticism has hardly been hidden from the brand’s top brass. Speigel is being presented as a ‘once in a generation’ CEO and founder and maybe SnapChat hopes that this will be enough to kindle interest. In favor of Snap, the company has strengthened significantly this year and emerged as one of the fastest growing businesses in its niche. The company has posted substantial new user growth over its lifetime ad this is one of its most impressive selling points.
However, this has to be viewed in conjunction with Facebook’s bid to rise to the occasion with its own photo messaging service that pretty much mimic’s Snapchat’s. The Facebook entrant is fairly new so it is too early to say whether it will significantly cannibalize Snap’s user base but impact will be seen, for sure. From Snap’s side its new user growth has not exactly been top notch in the late half of 2016 and that’s a bit of a dampener.
It might be too early to say whether SnapChat’s IPO will meet with the kind of success the brand’s top management hopes to garner but it is clear that the investors are not too sure about the degree of risk in the company yet. Snap will need to address this to ensure that its prospects get better ahead of the IPO.