Snapchat Files For Largest Tech IPO in US Since Alibaba; Filing Made Confidentially Under U.S. Jumpstart Our Business Startups Act
Snapchat, the fastest growing messenger app among youngsters all over the world, has filed for an Initial Public Offer (IPO), confidentially. The filing has been done at an approximate valuation of $20-$30 billion, thereby making it the largest tech IPO in since Alibaba and largest US tech IPO since Facebook.
Interestingly, the IPO was filed by Snapchat before Donald Trump was elected US President, and has been confidentially filed under U.S. Jumpstart Our Business Startups Act.
As of now, Snapchat has more than 150 million users (60% of users are aged between 13 and 24) all over the world, and they generated revenues of $59 million last year; and expecting to generate $350 million revenues this financial year.
Morgan Stanley and Goldman Sachs Group has been chosen by Snapchat to lead their IPO efforts, while JPMorgan Chase & Co., Deutsche Bank AG, Allen & Co., Barclays Plc and Credit Suisse Group AG would be joint book runners for the IPO launch.
Snapchat, which describes itself as ‘camera company’, had recently launched $129-a-piece video camera sunglasses, which allows the user to quickly click a ‘snap’ and share it via Snapchat app to their friends.
Their investors include General Atlantic, Sequoia Capital, T. Rowe Price and Lone Pine; and previous rounds have been funded by Fidelity Investment, Kleiner Perkins Caufield & Byers and Yahoo Inc. Recently, Google Capital, which is the investment arm of Alphabet, parent company of Google had also invested an undisclosed sum into Snapchat.
In May this year, Snapchat raised $1.81 billion, at a valuation of $20 billion.
Largest Tech IPO In US Since Alibaba
In 2014, Alibaba had launched their IPO at New York Stock Exchange, which was declared as world’s largest IPO ever. Alibaba wnet public at a valuation of massive $170.9 billion, and within 20 minutes of the launch, the shares touched $92.70 (at a face value of $68).
Comparably, Snapchat’s IPO launch has been planned at a valuation between $20-$30 billion, and right now, U.S. Securities and Exchange Commission are evaluating the papers to finalize the launch of the IPO. No date has been suggested for the expected launch as of now.
Besides, Snapchat’s IPO is also being hailed as the largest US tech IPO since Facebook’s IPO launch in 2012, which was valued at $81.2 billion and market capitalization of more than $100 billion.
It must be mentioned here that Facebook had once attempted to acquire Snapchat at a valuation of $3 billion, whereas now, Snapchat is about to launch an IPO at a market capitalization of $20-$30 billion.
IPO Filed Under U.S. Jumpstart Our Business Startups Act
Snapchat’s IPO filing has been done confidentially, under the U.S. Jumpstart Our Business Startups Act. This new act allows small businesses having revenues less than $1 billion to file for public shares without rigorous securities regulations and public debate.
The final rules and regulations for U.S. Jumpstart Our Business Startups Act went live effective March, 2016, and follows basic principles of equity crowdfunding.
Hence, Snapchat can very well be one of the first digital companies to have used JOBS Act for filing IPO.