Snap Inc., the owning company of the popular social media platform Snapchat and of the smart glasses called Spectacles, has just announced its IPO filing with IRS. Signing the form S-1 means that the company became an appealing point of interest for investors. Those who desire to be a part of the growth of Snap Inc. can take a look at conclusive data that the company is now making public. Many publications call this event the most awaited IPO in years. With a valuation of $25 billion, the company is the biggest offering since Alibaba, a Chinese e-commerce platform, entered the U.S. in 2014.
Snapchat has millennials on its side. This is because most of its users come from this generation. However, now that the IPO filing is done, the company expects investors to become a regular part of their business too. Now that its standard balance sheet is public as well as cash flow and income statements, one can see a lot of potential in this company.
The main revenue experienced a huge acceleration from 2015 to 2016. While two years ago, Snap Inc. closed the year with $58.7 million, in 2016 the figure sore to $404.5 million. This increase was the result of the newly introduced monetization methods and the rising number of users. The net income was $372.9 million and $514.6 million respectively, while the free cash flow registered $325.8 million and $677.7 million respectively for the last two years.
While all these data signal a bold growth, investors will look at the net loss figures as well. To make sure striking revenue is obtained, the company spared no funds on research and development. Its main focus was growth so keeping things the same was out of the question. In addition, the company’s dependency on its cloud company, Alphabet, spiked the expenses by 148%. As a result, the annual net loss tells a different story about Snap Inc. In 2015, the company lost $372.9 million which is 38% lower than last year, when Snap couldn’t cover the $514.6 million hole in the budget.
There is a great potential in the business form of Snap Inc., but the position of the company is not fortunate. Snapchat is currently in a tight competition with Facebook and Twitter. Both of its rivals copied Snapchat’s main points of interest for users which led to slow growth in the number of Snap users. Nonetheless, Evan Spiegel has proved for many times that his vision and abilities are incredible, and the IPO filing can only attract investors beside a young and powerful company that is in full expansion.
Image source: 1