Snapchat’s filed for its IPO, and with the filing comes a lot of talk about growth, profitability, potential stock prices, and Snapchat’s plans for the future. There have also been plenty of comparisons to other massive tech IPOs, primarily those of Facebook and Twitter. But how does Snapchat really stack up? And does that tell us something about Snapchat’s probable future?
When we start talking about IPOs, we tend to start talking in very big numbers that are difficult to understand without some kind of context. Without looking at what happened next, it can be hard to tell what it means to have a successful IPO. So we crunched some numbers and took a good hard look at what Snapchat’s current financials, growth prospects, and proposed stock prices might mean for its IPO given what happened before, during, and after Facebook and Twitter filed their own IPOs.
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Facebook and Twitter represent two very different of IPO outcomes. When Facebook filed, it was already a hugely profitable company that’d been around for eight years. It had over 325 million daily active users and had a staggering expected valuation of $104 billion dollars.
Twitter, by way of contrast, wasn’t profitable when it filed for its IPO. In fact, in the year prior to the filing, it posted a loss of $79 million. It had just 100 million daily active users, but it did end up exceeding initial conservative expectations of $12.8 billion valuation. It’s since been plagued by continuing profitability problems as it struggles to monetize and sustain growth.
There are dozens of variables that determine the success of a company after it goes public, but in looking for correlations between some key metrics for three of the largest social tech companies to file for IPOs, we found that Snapchat probably isn’t going to be the next Facebook, and that it has some work to do if it wants to avoid being the next Twitter.