Snapchat Files for IPO, Then Immediately States it May Never Be Profitable

This was just about a month after the launch of Snapchat's direct competitor Instagram Stories that recently claimed to reach 150 million daily active users.

This story originally appeared on The Hollywood Reporter.

Snapchat said that "substantially all of our revenue comes from advertising" and claimed that the mobile ad market is expected to grow almost three-fold from US$66 billion in 2016 to US$196 billion in 2020.

Snapchat files for IPO as $SNAP — looks to raise $3 billion
Holy Crap Snapchat Is Losing a Ton of Money

However, Snap lost $514 million a year ago, making the company still not profitable. Twitter was operating at a loss before going public, recording a net loss of $64.6 million in the quarter ended September 30, 2013, wider than its loss of $42.2 million in the prior quarter.

With the filing, the company also disclosed what has previously been uncertain - that it has 158 million daily active users. The 2016 revenues were higher than originally projected by eMarketer. It upset some investors by its decision to offer shares without voting power.

The company talked about its foundation in the S-1 filing for its IPO.

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But with Snap Inc committing to spend a hefty amount with Google's cloud, there third runner in the global cloud infrastructure could close the gap between its rivals.

But rather than die a fast death as a "sexting app", Snapchat showed a knack for evolving based on user whims and demands, just as Facebook has over the years. If it nears the $25bn mark it would give the company the richest valuation in a U.S. technology IPO since Facebook Inc.

The IPO prospectus is the first opportunity for outsiders to get a closer look into a company that's known for, among other things, its culture of secrecy.

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Mr Spiegel, the 26-year-old Snap co-founder, last year earned US$503,205 in salary, with a US$1 million bonus.

Benchmark Capital holds 12.7 percent of Class A shares and 22.8 percent of Class B shares, for a total voting power of 2.7 percent before the offering. The underwriters are Morgan Stanley and Goldman Sachs, along with J.P. organ, Deutsche Bank Securities, Barclays, Credit Suisse and Allen & Company LLC.

"While we view Spectacles as an extension of Snapchat, adding hardware products and services to our product portfolio subjects us to additional competition and new competitors", Snap said.

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