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.

Sources: fortune.com, marketwatch.com, investopedia.com, theregister.co.uk, recode.net

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 Markets.com you can trade CFDs on over 2,000 instruments including hundreds of publicly listed companies.

January 08th, 2017


Video disclaimer:
This information is communicated to you by Safecap Investments Limited (“Safecap”) and has been prepared by Trading Central S.A (“Trading Central”) of 11 bis rue Scribe, F-75009 Paris. Trading Central engages in the preparation of technical, economic and corporate news and analysis for the forex, equities and other global markets. Trading Central is not registered in France as an Investment Services Provider. Affiliates in the Trading Central Group are registered in two jurisdictions. Trading Central is remunerated for this service by Safecap on a fixed fee basis.

This information is not and should not be construed to be investment advice. It is communicated to you for general information purposes only and does not have regard to your particular investment circumstances or objectives. Descriptions of any company or companies or their securities or the markets / economies or developments mentioned herein are not intended to be complete. This information set out herein should not be regarded by recipients as a substitute for the exercise of their own judgment as the information has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. Furthermore, the application of taxation laws depends on an investor’s individual circumstances. Accordingly, each investor should seek, if he/she considers appropriate, relevant independent professional advice on both the investments considered as well as the taxation implications before making any investment decision. The information and opinions herein have been compiled or arrived at based on information obtained from sources believed to be reliable and in good faith. Such information has not been independently verified, is provided on an “as is” basis and no representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness, reliability, merchantability or fitness for a particular purpose of such information and opinions. All statements of opinion (including indicatively words or statements like “bullish”, “bearish”, “key support”, “outlook”, “projection”, “expectation” and “believe”) and all projections, forecasts, or statements relating to expectations regarding future events or the possible future performance of investments, represent Trading Central’s own assessment and interpretation of information available to Trading Central currently and do not relate to the individual circumstances of any investor or recipient of this communication.

This information does not form a fiduciary relationship or constitute advice by Safecap or Trading Central, and cannot be relied upon as a representation that any particular transaction necessarily could have been or can be effected at the stated price. This information is not an advertisement of securities. Opinions expressed herein may differ or be contrary to opinions expressed by other business areas of Safecap, Trading Central or their affiliates as a result of using different assumptions and criteria. All such information and opinions are subject to change without notice, and neither Safecap or Trading Central nor any of their affiliates is under any obligation to update or keep current the information contained herein. The financial instruments described herein may not be eligible for sale in all jurisdictions or to certain categories of investors.

The information herein is not intended for distribution to the public and may not be reproduced, redistributed or published, in whole or in part, for any purpose without the written permission of Safecap, and neither Safecap or Trading Central or any of their affiliates accept any liability whatsoever for the actions of third parties in this respect.

Trading CFDs carries risk and could result in the loss of your deposit, please trade wisely. Read full Risk Disclosure.