Report: Snap (formerly Snapchat) to raise $4 billion with its IPO; company valued at $25-$35 billion

As you might know by now, the parent company of messaging app Snapchat has changed its name to Snap. It plans on going public and raising money via an IPO this coming March, that will raise in the area of $4 billion. This values the company at $25 billion to $35 billion. That is a far cry from the $70 million valuation placed on the company during its first round of financing back in  2013.

The Snapchat messaging app also has come a long way from then, when it was known mostly for its self-destructing messages, both text and video. Messages sent by one subscriber to another disappear after they are opened by the recipient. Now, Snapchat is also known for its photography filters (lenses) that turns users into animals, a motorcycle cop and other strange creatures. Channels are now available for Snap's news partners to post magazine style content. And the company expects to see ad revenue soar from $59 million last year to $350 million this year.

Sponsored filters (lenses) are bringing in ad revenue, as are the ads that run in between users' Stories. Stories are pictures and videos posted by Snapchat subscribers for friends and family to peruse for a longer period of time. They stay on Snapchat for 24-hours during which they can be viewed as many times as requested by friends and family. After the 24-hour period is up, Stories are deleted automatically. Additionally, some companies are using Stories to stay in contact with potential customers.

Snapchat has a long way to go to catch up with its rivals when it comes to ad revenue. Twitter, which has fewer daily active users than Snapchat,
is expected to generate $2 billion in advertising revenue this year. Twitter though, is having some problems and is looking at bids from various companies looking to purchase it. The company is currently valued at a bit under $12 billion. The difference between the two could be perception. Twitter is seen as being in a downtrend, while Snapchat is looked at as being an up and coming messaging app.

source: BloombergTechnology


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