Public Offering Planned for Snapchat Shares

Its product may vanish in the blink of an eye, but Snapchat is poised to become one of America’s most valuable tech companies if it moves forward with a planned initial public offering.

 

The picture and video messaging firm – which recently rebranded itself for corporate purposes as Snap, Inc. – has reportedly hired two large investment banks, Goldman Sachs and Morgan Stanley, to advise it on how to tap the public equity markets.

 

Hiring advisory firms is usually one of the first signs that a company intends to make an initial public offering. The process, governed by strict federal regulation and stock exchange rules, culminates with a sale of shares to the public. By hiring advisors now, Snap Inc. could debut on the stock market as early as next January.

 

Recent research firm reports have valued Snap at $19 billion. However, some of the information that will ultimately be required for potential investors to gain a full picture of the company has not been made public. With revenues currently less than $1 billion annually, Snap is allowed to file its Securities and Exchange Commission application for an initial public offering confidentially.

 

When the firm begins its roadshow process, investors will be able to get a clearer picture of the firm and its prospects. Snap has hired JPMorgan Chase, Deutsche Bank, Allen & Company, Barclays and Credit Suisse to help it sell its shares as part of that larger public launch.

 

Snap, founded by Stanford University students in 2011, has become an extremely popular social media destination for teenagers. The app, free to download and use, is expected to earn $1 billion in revenue next year as it gradually rolls out sponsored posts for advertisers and channels for brands such as CNN and Cosmopolitan.

 

The fledgling company is one of Silicon Valley’s many unicorns, private firms valued at $1 billion or more. The existence of so many valuable tech properties has given rise to fears of another tech bubble, but few have tapped the equity markets. Snap’s offering will arguably be the biggest tech debut since Twitter.

Snapchat Planning On Acquiring Vurb For $100 Million

Major social media companies are continuing to buy hot new startups to add new features to their brands, and the latest such buyout has been a the mobile social media giant Snapchat’s acquisition of Vurb. According to Business Insider, the deal is set to be a $200 million purchase of Vurb through stocks and cash, with about 25% as stock funds and 25% purchase funds. Perhaps one striking aspect of this deal is that Snapchat plans on keeping most of Vurb’s current employees, including their CEO Bobby Lo who is said to be getting a $75 million contract to stay aboard. It’s unclear exactly what made Snapchat decide to purchase Vurb, as they have not given any interviews on the matter, but it’s been speculated that they are interested in what Bobby Lo’s team can bring to their company, perhaps even more so than simply adding Vurb’s platform to theirs.

Vurb is a search platform that is geared towards online shoppers or DIY people who want community reviews handy or other guides on finding what they’re looking for. Vurb has integrated various review sites like Yelp and Fandango on its interface, and also has an instant messaging program built in so users can contact their friends. The company was launched in 2011 and funded chiefly by Redpoint Ventures, with some additional funding from Atlas Ventures and CrunchFund.

According to MW Partners, Snapchat is currently the third most popular social media app, behind only of course Facebook and their chief competitor Instagram, but could this acquisition of Vurb expand its social media borders? With how established Facebook and Instagram are, Snapchat still has a lot of work ahead of it to catch them. But Snapchat has surpassed Twitter already and seems to be indicating they will be around for quite a while.