Snap shoots for the sky, promises little in US$3 billion IPO pitch

Snapchat owner Snap Inc shot the opening salvo in its US$3 billion initial public offering on Thursday, outlining aggressive expansion plans but offering new investors no say on how the company is run and no promise of profits.

Snap’s publication on Thursday of its IPO registration document sets the stage for its upcoming marketing campaign to convince investors to look past its widening losses and the firm grip of its founders, and focus on its rapid growth of active users.

The number of Snap’s daily active users grew to an average of 158 million at the end of December, up 48 per cent year-on-year, Snap revealed. However, its net loss widened to US$514.6 million in 2016 from US$372.9 million the year before.

While Snap will have time to polish its marketing pitch in the run-up to the IPO planned for March, some analysts were taken aback that the company was just beginning to reap cash from its product.

“What surprises me the most is that it is still very early days when it comes to Snap making money,” said Rohit Kulkarni, managing director at private securities investment firm SharesPost.

Snap had confidentially registered with the US Securities and Exchange Commission for an IPO late last year. It kept the filing under such tight wraps, even some of its IPO underwriters had not seen it prior to publication on Thursday, sources familiar with the matter previously told Reuters.