Snapchat leads ‘mega unicorns’ to market with $20bn IPO

A Snapchat story from the Rio Olympics celebrating one of Max Whitlock’s gold medals in the gymnastics finals © FT

Snapchat will lead its generation of mega unicorns into the public market after firing the starter’s gun on a US initial public offering that it hopes will put a value on the messaging start-up of between $20bn and $25bn.

A successful float, which could come as early as the first quarter of next year, would help pave the way for even larger technology companies from Uber to Airbnb to brave the public markets. 

Snapchat will be one of the biggest technology IPOs in recent years, as tech start-ups have been shy about going public, preferring to soak up private funding from venture capital and Wall Street fund managers. Uber, the ride-sharing app, was last valued on the private markets at $68bn, while Airbnb, the accommodation marketplace, has a $30bn valuation. 

Snapchat has appointed Morgan Stanley and Goldman Sachs to lead the IPO, according to people briefed on the plans.

After a quiet first half with no major technology IPOs, cloud communications company Twilio was the first unicorn, a tech start-up worth more than $1bn, to go public with its June debut. But there have yet to be any listings from this new generation of start-ups valued at more than $10bn. 

The LA-based start-up, founded four years ago by chief executive Evan Spiegel, now 26, and co-founders Bobby Murphy and Reggie Brown, is now on a push to expand internationally. 

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Snapchat has now reached 50m daily users in Europe, a third of its 150m daily active users worldwide. 

Disclosure of the user numbers, by Snapchat UK head Claire Valoti, gives investors a glimpse of the potential advertising market the app can tap into and comes less than a year after the company kick-started its international expansion, with the opening of a London office last December.

In April, Snap, as the company was recently renamed, opened an office in Sydney followed by a new Paris office earlier this month, and has a salesforce of hundreds worldwide.

“We are quickly growing our sales team globally,” said Imran Khan, the company’s chief strategy officer. “There’s now interest in other markets where we haven’t opened offices yet and we want to meet the demand in all western European markets.”

Of the 50m people using the app daily in Europe, 10m are in the UK, as the Financial Times previously reported. Despite Snapchat’s former reputation for being a teenage sexting app, Ms Valoti revealed that 77 per cent of British Snapchatters are over 18, and nearly half of those — 43 per cent — are parents. 

In the US, more than half of all new users are over the age of 25. Snapchat’s biggest US demographic is 18-24, followed by the 25-34 age bracket.

At the same time as Snapchat’s demographic has matured, the app is evolving its advertising business. The company, which last raised funds at a valuation of at least $15bn, has been working with advertisers ranging from Burberry and Tiffany to KFC and Stella Artois to create special photo filters and lenses for users.


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