We're about to learn everything we've wanted to know about tech's most secretive company

Snapchat’s parent company, Snap Inc., is planning to officially unveil its initial public offering prospectus this week, setting the wheels in motion for what’s likely to be the largest tech debut in years.

Snap was able to confidentially file its paperwork with the Securities and Exchange Commission in November because it has annual revenue of under $1 billion. Once its paperwork, or S-1, is made public, potential investors will be able to scrutinize the Los Angeles-based company’s financials for the first time.

Much of how Snap operates has been shrouded in secrecy since cofounders Evan Spiegel and Bobby Murphy launched the Snapchat app in 2011.

Snap is looking to float shares to the public at a $25 billion valuation, but there are still plenty of unknowns about the company’s business and its future prospects, which the S-1 should provide some more colour about.

Here are some of the top questions about Snap that investors will be looking for answers to:

  • Revenue and losses. As a privately held company, Snap has yet to disclose its revenue numbers or whether it’s even profitable. The company reportedly told its private investors that it expected to make $250 million to $350 million in advertising revenue in 2016.

    A report from eMarketer predicted that Snap would generate $935.5 million in ad revenue in 2017, a 155% increase from the 2016 forecast. If eMarketer’s prediction proves accurate, an IPO that values the company at $25 billion would be nearly 25 times its projected revenue numbers. (A much smaller chunk of Snap’s revenue will be Spectacles, the camera-equipped sunglasses it started selling in the fall. It will be interesting to see if Snap breaks out its revenue from Spectacles.)

  • Share ownership. Snap’s public offering filing will for the first time reveal the exact stakes held by its biggest shareholders, which will give insight into who holds the power. According to The Wall Street Journal, Spiegel and Murphy are expected to take a page out of Facebook CEO Mark Zuckerberg’s playbook and “hold more than 70% of the voting power despite owning roughly 45% of the stock.” The Journal has also reported that new investors would be offered shares with zero voting rights.
  • User numbers. The last time Snapchat’s user numbers leaked was in June, when Bloomberg reported that the app had 150 million daily users. But Facebook-owned Instagram amassed the same number of daily users for its Snapchat lookalike feature in just five months.

    Bloomberg reports that Snap has been touting its high user engagement (like time spent) in private pitches to analysts and bankers, and the S-1 should signal how much the company plans to tout high engagement versus user base growth going forward.

  • Life after millennials. Snapchat is all the rage among young millennial users, but the app is comically frustrating to use for people over 40. If Snap wants to convince Wall Street it has a bright future beyond the millennial niche, it will need to give a sense of how big its total addressable market can be.
  • Competitors. Snap’s S-1 should reveal who it sees as competitors in the industry, a topic that its management has so far talked very little about publicly. The Wall Street Journal reported that Snap has made an effort to not compare itself with Twitter in pitches to investors, which makes sense given that Twitter was never able to meet Wall Street’s expectations of growth after going public.

    The company has also been careful to not draw comparisons with Facebook in its internal and external messaging. But given how aggressively Facebook has copied Snapchat’s core features in recent months, Snap will be hard-pressed to not acknowledge Zuckerberg and company as a serious rival.

  • Mission. In September, Snapchat rebranded itself to Snap Inc. and started calling itself “a camera company.” Its mission statement now says: “We believe that reinventing the camera represents our greatest opportunity to improve the way people live and communicate. Our products empower people to express themselves, live in the moment, learn about the world, and have fun together.”

    Spiegel could elaborate on that mission in the company’s S-1 filing. It will also be interesting to see how much hardware products like Spectacles play a part in the mission in the future.

Portia Crowe contributed reporting.

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