Since 2011 smartphone users have been falling into a new way of communicating with friends by sending photos and videos to selected addressees. Snapchat, the application for this, limits the time the recipients can view the content to about 10 seconds. After this time the message is permanently deleted from the smartphone and can only be viewed from Snapchat server, given it was the last photo or video received from this user.
Most smartphone users regard such content evanescence as a sheer scoff, but certain audience is deeply into that. Those are mostly youngsters who do not want their parents to read their chats. Another segment is politically active people concerned about the government chasing their information exchange. Most importantly, however, it accommodates the developers of the application: they need an order of magnitude less storage volume to make it work that way. Howbeit, statistics speaks for itself: the application is used over 2 billion times per day with over 150 unique users. It exceeds same figures produced by, say, Twitter.
It’s strange that, being so stunningly popular, Snap Inc. has not yet been listed on any stock exchange. Experts estimate its cost on the level between $10 and 25B, and its IPO was awaited throughout 2016. Finally it is scheduled for March 2, 2017 on the New York Stock Exchange (NYSE,) and it is finally time for the hype.
Another hi-tech IPO, or how much Snap costs
Before the IPO the company disclosed its financial data. During 2016, it increased the revenues from $56M to $404M. This looks optimistic until we look further, at the net loss that amounted to an even larger figure of $515M. Moreover, in their IPO application the program developers openly admitted that the company ‘may never achieve or maintain profitability.’ This caused fierce arguments about the company’s perspectives.
If the company is valued at the level of $20B, this IPO will become the largest offering since Facebook and Twitter IPOs in 2012 and 2013 accordingly. Facebook’s estimated cost was $104B, Twitter’s – $14B; and although both start-ups looked truly perspective, consecutively they had very different fortunes.
Twitter’s quotes since 2013
After the initial spring in 2013, Twitter was caught into a delayed drop paired with significant profitability issues. Its stock price is currently close to the historical minimum.
Facebook’s quotes since 2012
Facebook can vaunt of a completely different trend: it stocks have been permanently growing since 2013. The company brings profit, and its P/E (the ratio of capitalization to profit) currently equals 39. This means that its stocks are not overestimated, as opposed to many other IT start-ups like Netflix.
Any expectations about Snapchat?
It is really hard to predict what will happen to Snapchat after the IPO. Facts show that the company is unlikely to ever get close to Facebook’s success. Its contradictory messenger may once become just an outdated tribute to fashion. The young will grow old enough not to hide their activities from parents and will start migrating to more traditional – and more convenient – messengers. While the younger users may easily prefer other means of communication, like Instagram Stories.
Nevertheless, this all is still rather far in the future, and the audience of Snapchat is soaring, nowadays amounting to 161 million active users, which is 48% more than last year.
Some allege that the company founders, Evan Spiegel and Bobby Murphy, are not counting on the company’s profitability at all, bargaining on the IPO itself. Each of them owns a 20% company share, so its high estimation will automatically make both of them billionaires.
There are more optimistic opinions, though: the yearly 7-fold revenue growth may be regarded as a really good winning chance. What is absolutely clear is that the first days after the Snapchat IPO are going to be really explosive. Whether quotes go up or down, it is a great chance to win for experienced traders and keen players.
How to be the first to buy Snapchat stocks
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