Snap Inc. Files for a $3 billion IPO, Potentially Elevating Its Worth to $25 billion

The rumors have been confirmed. The highly anticipated Initial Public Offering (IPO) by Snapchat, now rebranded as Snap Inc., is officially underway. The company has filed for a $3 billion IPO, a move that could potentially catapult its valuation to a staggering $25 billion, according to the documents published on the Securities and Exchange Commission (SEC) website.

Interestingly, in these documents, Snap Inc. cites industry giants Apple and Google as competition. This seems somewhat paradoxical, as both develop mobile operating systems that Snap’s app is fundamentally reliant upon. But the plot thickens. Snap Inc., recently entered into the tech wearables arena with its launch of Spectacles, a pair of connected sunglasses that can record bite-sized 10 second videos. Apart from their mobile operating systems, Snap Inc. deemed products such as Google’s YouTube, Facebook’s Messenger and WhatsApp, and Twitter as major rivals. However, an alarming report earlier this week noted brands witnessing a sharp decrease in Snapchat Stories usage by as much as 40 percent, indicating potential hurdles for the company.

While Facebook has often been blamed for applying pressure on Snapchat’s growth, some industry watchers believe that Snap has struggled to broaden its appeal. This becomes apparent when looking at user statistics of both platforms. Snapchat recently reported a daily active user count of 161 million, a respectable increase from the previous year’s 110 million. However, this pales in comparison to Instagram’s mammoth 500 million users. Snap reported that a considerable portion of its users, around 60 million, are based in the United States, with another 53 million residing in Europe. This means that compared to Instagram’s evenly distributed global usage, Snapchat’s user base appears to be geographically limited. It’s worth noting that 70 percent of Instagram users hail from outside the United States and a staggering 60 percent of its 500 million users log in daily. That’s about a third of the global internet users! Additionally, approximately 49 percent of brands worldwide utilize Instagram and 90 percent of the top 100 countries have Instagram accounts, demonstrating Instagram’s strong positioning globally.

However, Snap Inc. may have a saving grace- its Spectacles. This foray into wearable tech could signify a promising year ahead for the company, as it aims to establish itself as a key player in the burgeoning augmented reality (AR) market. This sector is projected to be worth a phenomenal $162 billion by 2020. As such, Snap’s $3 billion Initial Public Offering (IPO) could potentially elevate its valuation to an impressive $25 billion in the near future.