Snapchat parent company Snap Inc. has quietly filed paperwork for an IPO, setting the wheels in motion for what’s expected to be the largest tech debut in years, a source familiar with the matter told Business Insider.
Some people expect the offering could be even larger. Bloomberg has reported that Snap’s IPO valuation could swell as high as $40 billion.
Snap, which is based in Venice Beach, California, confidentially filed its paperwork with the US Securities and Exchange Commission before the presidential election, according to The Wall Street Journal.
Morgan Stanley and Goldman Sachs will lead the deal, while JPMorgan, Deutsche Bank, Allen & Co., Barclays, and Credit Suisse will be joint bookrunners.
Snapchat has emerged as one of the most popular consumer internet services, challenging Facebook, Twitter and Google for users and advertising dollars. With the tech IPO market stuck in the doldrums over the past year, investors are hoping Snap’s offering could open the gates to more IPOs, including closely watched tech companies like Uber.
Snap has told investors that it expects to make between $250 million and $350 million in advertising revenue this year. A recent eMarketer report predicted the company would near $1 billion in revenue in 2017 — meaning an IPO that valued the company at $25 billion would be 25 times its projected revenue numbers.
It’s not clear whether Snap is profitable however, and the company is aggressively expanding into new businesses and markets that are likely to eat into margins.
Snap’s main business is advertising in the Snapchat app, which has over 150 million daily users. But it recently rebranded itself as a camera company and started selling $130 camera-equipped sunglasses called Spectacles.
The Los Angeles-based company last raised $1.81 billion in private funding in May, which pegged its valuation at between $18 billion and $22 billion.
With annual revenue under $1 billion now, Snap is able file its Form S-1 with the SEC confidentially under the JOBS Act. News of the confidential filing was first reported by Reuters on Tuesday.
A Snap spokesperson declined to comment when reached by Business Insider.
Know anything more about Snap’s IPO filing or plans? This author can be discreetly reached via email at [email protected] or via “@alexeheath” Telegram.
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