Snapchat Sets Valuation At $19.5 - $22.2 Billion Ahead Of IPO, At Low End Of Range

After a year which saw a scarcity of tech initial public offerings, the upcoming Snapchat IPO is understandably on everyone's radar, which is why it was rather surprising that according to both the WSJ and the FT, the company has set a valuation for itself between $19.5 billion and $22.2 billion which equates to $14-$16/share, and is at the low end of $20-$25 billion range according to listing documents published earlier this month. Even so, it would be the largest US-listed tech offering since Alibaba went public in 2014.

The company and its underwriters will set a final IPO price based on feedback from investors in a roadshow that is about to begin.

The IPO comes one year after there were the fewest U.S.-listed tech public offerings since 2009 in terms of the number of deals and dollar volume, according to Dealogic, and the Snap offering will be closely watched for signs of a revival.

While the valuation range will still change, what won't is that Snap will be the IPO to issue shares with no votes, reserving the power over all major decisions and appointments for co-founders Evan Spiegel and Bobby Murphy. The move means Mr Spiegel, chief executive, and Mr Murphy, chief technology officer, are set to control the company and make decisions about acquisitions even if they stand down from those roles. As reported before, and as the FT notes, "that detail has been decried by investors, including a dozen of the US’s biggest pension funds, and stands in stark contrast to other mega IPOs in the tech sector."

Both Mr Spiegel, 26, and Mr Murphy, 28, are set to become billionaires when the company lists.

Still, some investors have questioned whether Snap is worth the valuation it is seeking. They cite slowing growth in its daily average user base, which recently stood at 158 million; increasing competition from Facebook Inc. (FB); and the limited control new shareholders would have.

As the WSJ adds, Snap will market the offering to mutual funds and hedge funds in meetings Monday in London, according to the people. After that, meetings will move to New York and other cities. The shares could be priced as soon as March 1 and begin trading the following day on the New York Stock Exchange under the ticker “SNAP”, market conditions permitting of course.

Snap is expected to disclose the preliminary valuation in an update to its IPO filing with the Securities and Exchange Commission as soon as Thursday.