Question

For the past year, there has been speculation that Snap Inc., the parent company of Snapchat, was planning to have an initial public offering (IPO.) Finally, in February 2017, Snap filed the paperwork with the SEC indicating it was going to be issuing stock soon. Snap’s IPO is expected to be the most expensive tech IPO in history; Snap’s valuation could go as high as $25 billion. Snap plans to issue common stock class A in this IPO; the common stock class A shares will have no voting rights. Private investors own Snap’s common stock class B shares, which provide one vote per share of class B stock owned. Snap’s founders own its common stock class C shares, which give the two founders ten votes per share of class C stock owned. The two founders have control of Snap through their votes. Fun facts about Snapchat: Snapchat’s original app name was “Picaboo.” Mark Zuckerberg of Facebook tried to buy Snapchat for $3 billion in November 2013; the founders of Snapchat rejected that offer. The majority of Snapchat users are 18 to 34 years old. On average, daily Snapchat users visit the app more than 18 times per day, spending 25-30 minutes in the app per day.

Answer 1

Case summary-

Company details -  Snap Inc.. is a social media and American based company which was started in September 16, 2011, by Evan Spiegel and Bobby Murphy based in Santa Monica, California. It's basic products are: Snapchat, Spectacles, and Bitmoji. The Company provides Memories, Discover, Camera, Friends Page,Snap Map, and Spectacles.

Facts regarding company- Snapchat (Actual name before was aboo) was targeted by Mark Zuckerberg of Facebook for takeover at $3 billion in November 2013; but the offer was rejected by Snapchat . On average, daily visitors aremore than 18 times per day, spending 25-30 minutes in the app per day as it has young segment users between age of 18 to 34 years.  .”

On Feb, 2017 the company declared its plans for an initial public offering (IPO) which add value to loss making company. Following are certain features of IPO-

• Stock Categorization:

Stock Category	Features
class A shares	No voting rights
class B shares	one vote per share of class B stock
class C shares	two founders ten votes per share of class C stock

• Most Expensive IPO:

It’s more than double as expensive as Facebook’s IPO, and nearly four times as expensive as Google’s.Snap’s valuation could go as high as $25 billion.

Positive Impacts of IPO:

• The company’s sales increased by almost 600% in 2017, as revealed by its IPO filing.

• Increase in Investors - As majority will rush to IPOs looking at recent growth of company.

• Capital restructuring with stock categorization scheme.

• More Liquidity and Capital Resources-Cash, cash equivalents, and marketable securities were $987.4 million as of December 31, 2016, primarily consisted of cash on deposit with banks and highly liquid investments in U.S. government and agency securities