Feb 3, 2017

Snap's unconventional IPO will test staid investors

Snap has some unique ideas, such as its Spectacles video glasses, but how they will translate into substantial revenue streams is a question for investors


When Snap published its initial public offering document on Thursday, the Snapchat owner broke new ground with a filing that referenced sexting, poop and a cartoon ghost puking a rainbow. But Snap's break from convention extended to more serious matters: it will be the first US IPO to issue shares with no votes at all, the company's losses surged last year to more than $500m and the messaging app's user growth — a crucial metric for investors — slowed in the most recent quarter.

Snap will become the first of the massive tech "unicorns" — with stablemates including Uber and Airbnb — to go public if it raises $3bn at a valuation of up to $25bn. 

Investors may be keen to buy the shares are a shortage of large tech IPOs in recent years. But they will also have to get to grips with the company's products and business model. The filing taught them Snapchat is no longer just for sending naked pictures, is used by devoted smartphone users on the toilet, and involves a lot of crazy ghost stickers. 

But it also raised many questions. Can Snap lure advertisers away from the digital duopoly of Google and Facebook? Will its stock soar like Facebook or sink like Twitter? And what does the future hold for the messaging app that has rebranded itself as a camera company? 

Financial Times
by: Hannah Kuchler in San Francisco