Snap Initial Public Offering Raises $3.4 Billion

Californian messaging app company Snap (SNAP) has raised $3.40 billion from an initial public offering of its shares, making it one of the biggest technology stock listings in recent years, highlighting the commercial potential of advertising for social networking media.

The company, co-founded by incumbent chief executive Evan Spiegal and chief technology officer Robert Murphy as a picture-based messaging app in 2011, said in a statement late on Wednesday that it priced its initial public offering of 200 million shares at a a price of $17 per share, for a total offering size of $3.40 billion. The shares are expected to begin trading on the New York Stock Exchange on Thursday under the ticker symbol SNAP. The company has also granted its underwriters a 30-day option to purchase up to an additional 30 million shares.

Rapid user uptake of Snap’s messaging app has highlighted the speed with which social networking media apps can gain widespread appeal for particular population demographics and how that can translate into advertising revenue. Snapchat – the company’s flagship messaging product which deletes pictures by default after they have been viewed – started out with 1,000 daily users when it launched in 2011. Five years later, it had 158 million users, with more than a third aged between 18 and 24, according to information detailed by the company in a regulatory filing last month.

The company has expanded its offering significantly from sending photos – also known as ‘snaps’ – to include videos, voice-calls and text-based chats as well as developing spectacles. It launched on iOS in 2011 and on android in 2012; the same year its daily user count rose from 100,000 to 1 million. Based in the Venice neighborhood of Los Angeles, the company had more than 1,800 employees at the end of 2016, up from 600 one year earlier.

But while growth in user numbers has been stellar, the company posted a net loss of $514.6 million for the 2016 year, wider than the net loss of $372.9 million recorded in the 2015 year, according to the regulatory filing. Revenue, which the company said is substantially generated from advertising, was, nevertheless, more than six times greater than in the prior year, jumping to $404.5 million in 2016 from $58.7 million in 2015.