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Snapchat teases IPO plans as it dismisses buyout possibilities


By Seb Joseph | News editor

May 27, 2015 | 4 min read

Snapchat chief executive Evan Spiegel has revealed plans are underway to sell shares of the ephemeral message service on the stock exchange and has no desire to entertain any acquisition offers – like Facebook’s £3bn bid two years ago.

It marks the first acknowledgment from the usually tightlipped Spiegel that an initial public offering (IPO) for his app is imminent, offering the clearest indication yet about his financial plans for the business he founded four years ago. The messaging service, which is popular with younger users, has shied away from discussing business plans in the past though has been forced to change tact in recent times as its long-term future has increasingly been questioned by investors and industry observers alike

“We really need an initial public offering (IPO),” Spiegel told attendees at the Recode Code conference yesterday (26 May). “We have a plan for that.”

He declined to offer any further detail such as the IPO's timing but talked up the value of the platform, which is tipped to be worth $15bn. Snapchat now has nearly 100 million daily active users in “developed markets”, he continued with a significance portion of those actually sharing their own content.

“What’s important is that 65 per cent of [those users] are creating content,” Spiegel added. “That gives you some sense of the investment that Snapchatters are making”.

Despite its emergence as a force on the social media scene, Snapchat has generated very little revenue. While much of this has stemmed from a reluctance to spurn its valuable, younger userbase by bombarding them with ads, lately the business has started to get serious about how it monetises that traffic. In January, it began serving branded content from publishers such as CNN, Yahoo News and ESPN and in the same month poached leading tech banker Imran Khan from Credit Suisse to become its chief strategy officer.

It also plans to send out pitch book to advertisers, compelte with data showing that more than 60 per cent of 13-to-34 year old smartphone users in the US are active Snapchatters, Bloomberg reported. Spiegel also told Bloomberg that the message app’s users now watch two billion users a day – that’s half the number of those on Facebook though the social network is ten times larger.

The business has repeatedly stressed the importance of ads adding to its experience rather than detracting from it, an issue Spiegel brought into sharp focus during his interview with Recode. He spoke about how the company’s priorities are now focused on the time people spend with the service instead of just the number of them that log in.

The moves suggest a more robust, sustainable business plan for the business, something which was all but confirmed by Spiegel’s claim that he needed to grow Snapchat as “fast as humanly possible”.

He went on to dismiss that the Snacphat’s red hot streak would lead to it being bought out. Spiegel famously rejected Facebook’s $3bn bid for his company in 2013, a decision which at the time was publically derided by observers at the time but was vindicated late last year when a fundraising round swelled its value to $10bn. Snapchat’s worth has since rocketed even further to $15bn after a cash injection from Chinese ecommerce group Alibaba in March.

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