Snapchat's Founder Evan Speigel

Venture Explains: Snap’s Mega IPO

What is it? Snap, the owner of Snapchat, the hugely popular vanishing messaging app, is expected to go public this month at a vertiginous valuation of around $25 billion, the biggest IPO for a US tech company since Facebook’s historic 2012 listing.

How big is Snapchat compared to its rivals? With 158 million daily active users, Snapchat is much, much smaller than Facebook, which boasts 1.2 billion daily active users and Instagram, with 600 million monthly active users and 150 million daily actives signed up to the Instagram Stories feature. Twitter, meanwhile, has 319 million monthly users.

So why is Snap, which made a loss of $510 million last year, expected to hit such a high valuation? Many investors seem sold on Snap’s ambitions to become more than just a messaging app. The video sunglasses it released last year, called Snapchat Spectacles, showed how the company is trying to position itself as a camera manufacturer. Snap also says its users watch 10 billion videos a day. Many of these last no longer than 10 seconds. But if enough are strung together in a single package, they effectively become a new form of TV programming that could potentially tap into the multi-billion dollar TV ad market.

Will the Snap IPO be the last big tech share offering for the foreseeable future? Don’t bet on it. Reports suggest an Uber IPO could happen later in the year that would value the ride-hailing app at around $70 billion.