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Snap readies to put out the message on IPO

Snap, the owner of Snapchat, will publish its initial public offering filing late next week, kick-starting the largest US technology IPO of recent years, according to people familiar with the process.

The company, famous for its disappearing snaps and shortlived photo stories, confidentially filed its IPO documents with the US Securities and Exchange Commission late last year, the people said, in the hope of listing as early as March.

Snap is aiming for a valuation of between $20bn-$25bn, higher than rival Twitter’s $18bn valuation at IPO in 2013, and substantially higher than its last private fundraising round last year. Morgan Stanley and Goldman Sachs were leading the offering, the people said.

A successful offering for Snap could beckon other “mega unicorns” — private tech companies valued in the tens of billions — into the public markets, after many have sheltered in private markets, raising larger and larger rounds from investors such as mutual funds and sovereign wealth funds.

Snap renamed the company, which was formerly known as Snapchat, late last year, branding itself a “camera company” rather than a social media platform and launching Spectacles, its first hardware product, which are video sunglasses.

The LA-based company has been preparing to go public by recruiting Michael Lynton, former chief executive of Sony Entertainment, to become chairman, and creating a new three class stock structure designed to ensure co-founders Evan Spiegel and Bobby Murphy retain control over the app.

Snap has also been wooing marketers to buy photo and video ads in Snapchat, making it easier to target subsets of its 150m daily users and to measure the effectiveness of adverts. Revenue at Snapchat could reach almost $1bn this year, up more than 150 per cent year-on-year, according to research group eMarketer.

But the company is also facing increased competition from old rivals Facebook and its subsidiary Instagram. Instagram introduced a similar “stories” feature in August 2016 and is already selling advertising in the daily slideshow of photos. Facebook is trialing its own “stories” section at the top of the big blue app in Ireland, and may roll it out to other countries soon.

Via FT