Snap Inc, the firm behind the popular, evanescent picture-messaging app Snapchat, is expected to release its IPO in the near future—but the deal might not satiate investors.
According to the Wall Street Journal, Snap’s co-founders Evan Spiegel and Bobby Murphy plan to retain firm control of the company by issuing shares that are sans voting rights. Unnamed sources claimed that the pair will retain more than 70 percent of voting power, despite holding just 45 percent of stock.
It’s not unheard of to sell different classes of stock which come with different types of voting rights in order to keep some power in the hands of company founders and early investors. Nonetheless, the WSJ‘s analyst described Snap’s planned strategy as “extreme.”
Snap quietly filed papers with the US Securities and Exchange Commission for its IPO last November—which it was entitled to do due to an annual revenue of under $1 billion (£820 million). It has been reported that the app maker could go public as early as March. It’s expected to raise as much $4 billion (£3.29 billion), with a target market valuation of at least $25 billion (£20.58 billion).
As noted by the WSJ, 2016 was one of the worst on for IPOs in nearly a decade and a half; it had the fewest since 2009, and at $4.3 billion (£3.54 billion), made the least money since 2003. Snap’s IPO is seen by market watchers as a lone bright spot for 2017.
“Once Snap goes public, it will be a bellwether,” Evan Danckwerth, an analyst with private company tracker PrivoCo Media LLC, told MarketWatch.
The company’s 2017 IPO outlook cautiously predicted that other tech outfits with on-paper valuations of more than $1 billion might go public this year. Likely candidates include Uber, Dropbox, Airbnb, and Xiaomi.
Ars has asked Snap for comment.