Snap, Inc., the company formerly known as Snapchat, will make an IPO that values the company at approximately $25 billion.
According to sources cited by The Wall Street Journal, the company is aiming for a March offering. Snapchat’s success comes in stark contrast to other social networks such as Twitter, which continue to struggle.
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Snapchat ad revenues set to soar
The company is competing directly with Facebook and other massive tech companies, but that hasn’t affected its outlook. According to forecast from eMarketer, Snapchat is set to see “explosive” growth in ad revenue in coming years.
Researchers say that the app will rake in $366.69 million from ad revenues in 2016. Next year that figure is predicted to rocket to $935.46 million.
According to Cathy Boyle, principal analyst at eMarketer, the company has a positive future thanks to the youthfulness of its user base. “Advertisers are attracted to Snapchat for its broad reach among young Millennials and those in Generation Z, which are valuable demographic groups for many businesses,” writes Boyle in a new report.
Stories set to overtake Discoveries in making ad revenue
Snapchat has done well to tailor its advertising strategy at this demographic. “To engage those often hard-to-reach consumers, Snapchat has expanded its advertising portfolio over the past year to include a wider array of video ads and more sponsored geo-filters and sponsored lenses,” adds Boyle.
eMarketer data reveals that the Snapchat Discover feature generates 43% of ad revenue in the United States. This is its largest share. However the company expects that Stories will generate more ad revenue than discover next year, with 37.8% of ad revenue from Stories.
The research firm estimates that the company only takes in 2.3% of the total social-networking dollars. The app only launched its advertising platform last year, and now has 36% of the market in terms of U.S. users of social media.
Spectacles glasses an interesting move
Snapchat continues to try out new categories as it approaches its IPO. The latest endeavor from the company is Spectacles, video-recording sunglasses that will sell for $130.
Spectacles will go on sale later this fall, and the hardware is capable of recording 10-second videos taking in an approximation of our natural field of vision. This is made possible thanks to a 115-degree lens that can record circular video.
There is a chance that Snapchat becomes the first company to successfully convince people to wear a connected gadget on their face. Other companies have tried and failed to do so, including Google.
The company eventually gave up on its Glass initiative, but not before spending millions of dollars on development and marketing. If anything it looks like Snapchat has learned from Google’s mistakes.
For a start the $130 price tag for Spectacles is fairly reasonable, especially compared to $1,500 that Google wanted to sell Glass for. Snapchat is also marketing its glasses as a single-purpose device, which is usually easier. Another bonus is the company’s good relationship with younger consumers, who are key in starting trends.
Some people may have been surprised by the move into hardware. However industry watchers were aware that such a move was in the offing.
Snapchat had been hiring staff with expertise in the hardware for a while. The company had also acquired several small companies which worked in related fields.
If ad revenue continues to grow as predicted and Spectacles prove to be a success, Snapchat could be on course for a huge IPO.