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Asa Mathat/RECODE
Snapchat, the ephemeral message service popular with youngsters, has its sights set on an initial public offering but is keeping its plans private — for now.
“We really need an IPO — we have a plan for that,” Snapchat CEO Evan Spiegel said Tuesday during an onstage interview at the Recode Code conference in Rancho Palos Verdes, Calif. The comments mark the first public acknowledgement that the $15 billion startup is considering an IPO.
While said he couldn’t say more about the company’s IPO plans, the 24-year-old Spiegel revealed that the company attracts nearly 100 million daily active users in “developed markets.”
“What’s important is that 65 percent of (those users) are creating content,” he said. “That gives you some sense of the investment that Snapchatters are making.”
Snapchat, which was founded in 2011, is a mobile app that allows users to take photos or videos that automatically self-destruct after a set time. The service reported in August that it had more than 100 million users worldwide, but a report in January suggested that it may be closing in on 200 million active users.
Despite that growth, Snapchat has generated little revenue. The company announced in January, however, that it was getting serious about making some cash by serving ads to users from several well-known brands, including CNN, Yahoo News, ESPN, and others.
Speculation that an IPO was in the future has been churning since Snapchat famously spurned a $3 billion acquisition offer from Facebook. Imran Khan, a banker who helped lead Chinese e-commerce giant Alibaba’s massive IPO in 2014, joined the Snapchat team last year, suggesting that an IPO may be in the startup’s near future.
When asked Tuesday if he would entertain another takeover offer, Spiegel said bluntly, “No.”
Spiegel also said he worries that the tech industry is in a bubble and the burst is imminent.
“I think people are making riskier investments and I think there will be a correction,” he said. “We don’t know when but it’s something we factor into our plans when we think of the growth of our business.”
The startup’s valuation has skyrocketed in the past year, thanks largely to a $20 million investment from venture-capital investment firm Kleiner Perkins Caufield & Byers that helped value the Los Angeles-based company at $10 billion. In March, Alibaba made a $200 million in Snapchat, giving the 4-year-old startup a possible valuation of $15 billion.
Snapchat is banking on its popularity with young users — a key demographic for social networks. A whopping 71 percent of Snapchat’s US-based users are between the ages of 18 and 34, according to a study published in March by research firm ComScore. Facebook and Twitter, meanwhile, are made up of 38 percent and 41 percent of users in that age group, respectively.
