After filing for its IPO, Snapchat’s parent company Snap Inc. has offered investors $17 per share, valuing the company at $24 billion.
The original plan was for Snap to sell around $3 billion of stock at about $15 per share, which would have valued the company at approximately $21 billion. And even before that, the company was reportedly valued at around $20 billion.
But, while the company seems to be growing, Snapchat was incapable of generating a profit before it went public (much like Twitter). Snap has even publicly stated that expects more losses than gains in the future. Also, while Snapchat recently surpassed Twitter in its number of daily active users, it’s unlikely that it will have the global scope of the social network titan that is Facebook.
In spite of all that, Snap and its bankers seem to have faith in investors’ in enthusiasm for the company. Buying now has the potential to turn a pretty decent profit. Of course, that’s under the assumption that the company can actually turn Snapchat into a profitable service.
Anyone who wishes to buy shares in the company runs a risk, but that’s just how the stock market rolls. Snapchat has the potentially to be really huge; it could potentially make investors a ton of money if they buy now. Of course, it could totally flare out and lose money too. And seeing how it has yet to make any real money so far, investing would be quite a dramatic leap of faith. Since investors won’t be allowed a say in how the company is run, the responsibility falls onto Snap’s two young founders to make their creation lucrative.
[via The Verge]