The company behind Snapchat, a social network famous for its quickly disappearing messages, is making what could be one of the largest tech market moves in years.
Snap Inc said it is seeking up to $3 billion (£2.4bn) in an initial public offering (IPO), a figure that could shift based on investor demand, which will help determine the price per share sought by the firm in the upcoming weeks.
Snapchat has millions of users, particularly among teenagers, and Snap has built a thriving advertising business on the back of it. But the company has also made a lot of money – nearly $900 million – disappear in the past two years.
The fast-growing social network for the younger set boasts 158 million daily users. It lets people send photos, videos and messages that disappear a few seconds after viewing.
It was created in 2012 by Evan Spiegel, who dropped out of Stanford University just three classes shy of graduation to focus on the app.
Spiegel, 26, is poised to become a multi-billionaire, along with his former fraternity brother at Stanford, Robert Murphy, 28, who is also a company co-founder.
Each owns 227 million of Snap stock, which was valued at $30.72 per share nine months ago when the company raised $700m from a group of investors, according to an IPO document filing. If Snap can fetch the same price in its IPO, Spiegel and Murphy each will be worth $7bn.
Snapchat could have died a quick death as a “sexting app”, but Spiegel showed a knack for adapting to users’ whims and demands, just as Facebook has over the years. This, as both companies have discovered, is key to outlasting social media fads.
But Snapchat is no longer just about disappearing messages. Over the years, it has added a Discover section where a diverse group of publishers – including People, the Wall Street Journal, CNN, Vice and Food Network – post video-heavy stories aimed at millennials.
Another feature, Stories, lets people create a narrative from messages, videos and photos from the past 24 hours. It is so popular that Facebook’s Instagram now has a version of it, too.
And then there is Lenses, which lets people add animated overlays to photos and videos – animals, for example, or flower crowns and sparkly eyes.
The company came under fire a couple of times for adding filters many saw as racist. One had slanted eyes and buck teeth; another, which Snap called a Bob Marley filter, darkened people’s skin. Snap later got rid of the offending filters.
The company looks set to adopt a model designed to give final say to the company founders. That would be similar to set-ups at Facebook, where chief executive Mark Zuckerberg holds all the power, and Google parent Alphabet, where Larry Page and fellow co-founder Sergey Brin can override all other shareholders.