Snap Inc. has filed confidentially for an initial public offering with the Securities and Exchange Commission, according to people familiar with the matter. The Venice, California-based company filed paperwork with SEC before last week’s U.S. Presidential election, sources familiar with the situation said. The IPO will value the popular Messaging app at $20 billion to $25 billion. It will be listed as soon as March next year.
This marks one of the largest debuts in the U.S. market since Chinese e-commerce company Alibaba Group Holding Ltd. In 2014. People are expecting Snapchat’s successful IPO could boost the IPO market. According to Data provider Dealogic, only 103 companies went public in the U.S. in 2016, raising just $21.8 billion. Snapchat’s IPO may also encourage other Technology companies to go public.
Under the U.S. Jumpstart Our Business Startups, companies with a revenue less than $1 billion can file for an IPO privately without showing companies’ details with the public.
But some investors may have concerns on the high valuation of the social media company. Snapchat’s main source of revenue come from selling ads on Snapchat. The company expected revenue of between $250 million and $350 million in 2016 and as much as $1 billion in 2017.
“Snapchat will certainly be an indicator of whether there is a big pile of investor cash ready to go into the market,” said Doug Bontemps, Silicon Valley Bank’s managing director of corporate finance. “But Snapchat is unique. It’s growing quickly, is doing some interesting things with glasses and has gotten a lot of attention. There aren’t a lot of that ilk.”