Sometimes, companies regret rejecting splashy acquisition offers (see: Pebble). This isn’t one of those times. Snap, maker of Snapchat and Spectacles, is said to have rejected a $3 billion buyout offer from Facebook, and it looks like that decision is about to pay dividends. Snap filed for its IPO this week, and while valuation hasn’t been confirmed, the Wall Street Journal suggests that Snap will be valued at as much as $25 billion. That would make it the biggest IPO in over two years, since Alibaba’s September 2014 offering.
Snap’s IPO filing will see it listed as a publicly traded company on the stock market, which means the company’s financial information will now become public, as well. The S-1 is the part of the filing that lists all those financial details, in this case revealing that Snap took in $404.5 million in revenue last year, thanks to 158 million daily active users creating a pretty staggering 2.5 billion snaps every day.
That $404.5 million in revenue blew past the company’s 2015 take, which amounted to $58.7 million. But, it’s not all good news for Snap — it’s still far from making a profit, losing $372.9 million in 2015 and $514.6 million in 2016. Aside from more ads, it’s not clear how Snap can make up that shortfall. Costs would have to be cut, and it’s unlikely that Spectacles by themselves will become a big enough revenue driver to make a large enough dent. It’s particularly concerning given that Instagram has been rapidly implementing Snapchat-like features, something that appears to have caused a significant slowdown in user acquisition for Snapchat. The most promising avenue is probably to get into original, produced content (Snap is currently looking for Snapchat shorts for the Tribeca film festival), but Facebook is going there, too.
In the S-1, Snap reiterates that it considers itself a camera company, but there are no clues as to what Snap is planning to move further in that direction. It’s safe to say they’ll want to drop some hints in the near future, or the IPO later in the year might not go off all that well.