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Snap Set to Pitch $3.2 Billion Share Sale to Voteless Investors

Snap Set to Pitch $3.2 Billion Share Sale to Voteless Investors

Snap set the valuation of its initial public offering (IPO) at between $19.5bn and $22.2bn in what could be the third-biggest technology offering of the past decade, people familiar with the matter said.

Next month, Snapchat parent company Snap will begin selling shares on the public market in one of the most highly anticipated I.P.O.s for a tech company since Twitter went public in 2013. It's also set to be the first U.S. listing from that industry this year, according to data compiled by Bloomberg.

Snap Inc's initial price range puts the company's initial public valuation below the $25 billion it was reported to be seeking. At a valuation of $19 billion, Snap stock would trade at 47 times sales, not quite as sky high as the price-to-sales ratio of 62 that we previously computed.

"Even I was [surprised] by the slowdown in user growth, and user growth is very important at this stage", said Santosh Rao, head of research at Manhattan Venture Research, a merchant bank focused on the secondary market for late-stage venture-backed technology companies. And the company's decision to offer no voting power with shares being offered in the IPO has drawn criticism from both existing and prospective shareholders.

Net losses widened to US$514.6 million from US$372.9 million in that period. The company and its underwriters will set a final IPO price based on.

More news: MSU's Klages retires amidst Nassar-related allegations

Snap had a net loss of $514.6 million on $404 million in revenue for the year ending December 31, 2016, compared to a net loss of $372.9 million on $58.7 million in revenue in the prior year.

According to the Financial Times Snap is due to host an investor roadshow next week with presentations in London, Boston, New York and San Francisco.

While management is sure to tout its revenue increases, Snap may face questions about its user growth, which slowed in the second half of 2016.

Snap is aiming to sell 145 million shares, with the proceeds going toward operating expenses, capital expenditures and for potential acquisitions. The startup noted that it is offering to sell 200 million Class A common shares and is trading in the New York Stock exchange. After the offering, each will maintain a 44 per cent control over the votes.

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