Initial Public Offering (IPO)

Snapchat IPO

The deciding day is near. On 02 March 2017 the world will officially know what will happen with the Snapchat IPO, possibly making the global markets volatile.

Snapchat is making waves since officially filing for an IPO on 2nd February, 2017. The popular photo messaging app’s owners (Snap Inc.) are seeking a valuation of $25 billion, potentially making it the biggest IPO to date. The financial performance of Snap in 2016 is hard to ignore.

  1. 600% Sales Growth Rate – $404.5 million in 2016 compared to $59 million in 2015.
  2. Advertising Revenue – 98% of Snapchat’s revenue in 2016 came from advertising.
  3. Forecast - Bloomberg projects Snapchat will generate $1.76 billion in revenue by 2018.

Despite the impressive growth rates, it needs to be mentioned that Snapchat is still losing money. The 5-year-old company lost $514 million in 2016.

Snapchat is considered to be the top platform amongst the young masses. Here’s why:

  1. Over 158 million daily active users (accurate for Q4 2016).
  2. Majority of Snapchat users belong to the ultra-young 18 to 34 age-group.
  3. Average daily usage time is estimated to be almost 30 minutes!

Here are 3 important things you need to know on the business side:

  1. Snap uses Google Cloud (GOOG) for its technical computing needs. Snap has also committed to spending $2 million with Google Cloud over the next 5 years.
  2. The company, mainly based in the USA, had 1,859 employees in 2016.

Facebook Inc. (FB) and Twitter (TWTR) are considered its biggest rivals. While there have been many tech IPOs over the years, some have made a serious impact on the global financial markets. Here are just a few to refresh your memory.

Facebook – May , 2011, $16 Billion

Linkedin – May 19, 2011, 4.3 Billion

Twitter – November 7, 2013, 14.2 Billion

Based on the cases above, it’s tough to predict what will happen to shares after the IPO actually happens. Twitter is down 49% since its IPO, while Facebook is up 249%. Which way will Snapchat go?

Many financial professionals predict that Snapchat’s fate will be unlike Facebook’s because it lost $514 million in 2016. FB made profits of $1 billion before its IPO. On the other hand, the FB IPO came 8 years after it was founded, while Snapchat is doing so after just 5 years.


March 2nd, 2017

Watch previous videos:

February 23th, 2017
February 16th, 2017
February 09th, 2017


What is it?

An Initial Public Offering (IPO) refers to the first time that the stock of a private company is offered to the public. Often issued by emerging companies with plans to expand, IPOs are a good way to raise capital. They also allow large privately owned companies to become publicly traded.

Once a company enters this process, it stops being a private company and instead becomes a publicly-listed company on the relevant stock exchange. This effectively means it must make its accounts public and share growth and earnings statements.

Trading IPOs

Trading always carries risks, but with IPOs, the risks are increased as there is little or no historical data to analyze.

We recommend that you review the Economic Calendar to find the dates of upcoming public offerings and follow the financial news to get as much information about the company as you can.

Once the IPO has happened you trade on the company’s shares like you would on any other company. With you can trade CFDs on over 2,000 instruments including hundreds of publicly listed companies.

January 08th, 2017

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