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Is Snapchat’s IPO Worth It?

Is Snapchat’s IPO Worth It?

 

Snapchat’s been making waves in the tech world starting with the famous refusal to sell the app to Facebook for an astounding three Billion USD. The gamble by Snapchat’s mastermind Evan Spiegel paid off handsomely when its valuation soared, to the surprise of many analysts. The company’s IPO is planned to be launched in the first four months of 2017 expected to be valued at a prodigious 20-25 Billion USD. This is the biggest IPO from an American tech company since Facebook which was valued at 81.2 Billion USD and more recently, the Chinese e-commerce giant Alibaba Group Holding Ltd, which was valued at a record USD 170.9 Billion just 2 years ago.

 

· Confidential IPO

Since Snapchat has registered revenues of less than 1 Billion USD this year, it has used its right under the U.S’s. “Jumpstart Our Business Startups Act” to secretly file for an IPO to test its waters while keeping its financials strictly confidential. Regardless, the IPO is going to be huge as Bloomberg reports that it can quite possibly reach upwards of 40 Billion USD. At this point, it’s safe to say that the possibility of it being a massive IPO is inevitable.

 

· Playing it safe

Even if we consider the worst case scenario, the company will be well worth over the three Billion USD which was offered by Facebook initially. Private funding and other vital factors currently value the social network at around 18 Billion USD already, proving the company’s stock to be immensely in-demand right now.

 

· Twitter and Facebook

Back in 2011, Twitter and Facebook had revenues valuing 108 Million USD and 3.7 Billion USD respectively. Twitter is experiencing loss recently and Facebook has been experiencing its net income ascending. Facebook’s effective innovative decisions have led to its success in the stock market constantly. Its strategy of literally buying all of its potential competitors has worked wonders. While the same can’t be said for Twitter.

 

· Fierce Rivalry

Unless you’ve been living under a rock, you would know that Facebook and Snapchat have seen some fierce rivalry in the past months as Instagram and Snapchat have been fighting head on to exceed its daily active user base. Instagram has a daily active user base of almost 300 million, which is double the user base of Snapchat. Snapchat is undoubtedly a threat for the big fishes in the realm of social media. After rejecting the Facebook’s buying offer of the platform, Snapchat is going head to head with Facebook.

 

· Snapchat’s secrecy policy

Secrecy is almost second nature to Snapchat’s way of doing things. All the news about its daily active user base and other important details only have been brought to light due to leaks. To gives you an understanding of its extent of secrecy, the employees working in Snapchat for years have never had a glimpse of their leader, Evan Spiegel. Augmented Reality World Lenses were launched recently without the knowledge of its own employees.

 

· The verdict

Snapchat’s IPO will definitely be worth it for investors as it has the potential to overtake tech giants by introducing a completely different form of communication to the masses. The way this app has retained its loyal daily active users and continues to innovate and bring new filters daily, it will most probably soar in revenue and pose to be a great investment opportunity. Snapchat looks like the next Facebook in the making.  Evan Spiegel has proven to the world he is an entrepreneur deserving our attention.

 





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