By Matthew Radman,
Money and Investing Writer
The latest Silicon Valley unicorn to take their company public is Snap Inc., the company formerly known as Snapchat. The company famous for their self-destructing photos messaging app has confidentially filed for an initial public offering (IPO) as the latest step for the ambitious company to expand into a large player in the expanding technology space.
That ambition is evident in their projected valuation between $20 billion and $25 billion dollars, that is, for a company expecting $250 to $350 million in revenues. That multiple is not as extreme when considering that it is similar to the earnings of Twitter Inc. (NYSE: TWTR) had when it began publicly trading in 2013. However, Twitter’s stock is currently trending below its initial $26 value. It is also worth mentioning that both companies would not be profitable by the time of their IPOs. Another relevant comparison is the IPO of Facebook Inc. (NASDAQ: FB). Facebook is currently trending at about triple its initial $38 price per share. When it went public in 2012, it was valued at around $100 billion and was profitable to the tune of $1 billion.
The climate surrounding tech startups has seen a significant upshift since Facebook’s IPO. In 2010, CEO Mark Zuckerberg remarked while discussing his company’s goals of public offering “we are definitely in no rush.” He was patient and had cemented a group of executives with whom he ultimately did take the company public when it was eight years old. In contrast, Snap will only be five in March when it is predicted to take its company to the stock exchange.
However, comparisons become less apparent when considering that Snap is a very different company than its older siblings Facebook and Twitter. Snap has already positioned itself as separate from those other social media titans stating on its website “Snap Inc. is a camera company. We believe that reinventing the camera represents our greatest opportunity to improve the way people live and communicate.” The time could not be better for a company like this, with the future of virtual reality, augmented reality, and live streaming being as bright as it is.
Snap is also the first of its relatives to come out with a hardware product, Spectacles. Spectacles are a pair of $129.99 camera-clad sunglasses that connect to a user’s phone and allow them to share point-of-view style photo and videos. With that kind of versatility and vision, it becomes clear why Snap is setting its sights (or Spectacles) so high.
Snap Inc. is a company who is secretive in most respects except for its ambitions and its focus on innovating its way to becoming a massive company. With the help of companies who came before and paved the way, the stock market is now more educated on what makes these tech companies different than traditional companies. While different than other tech companies who came before, Snap is confident that when it brings its Silicon Valley team to New York City next year, investors will rally around their fast, aggressive, and no-nonsense approach.
A version of this article appeared in the Tuesday, December 13th print edition.
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