Snap Inc, the owner of trendy social media site Snapchat has confirmed plans for a US$3bn share sale, but investors will have no voting rights in the firm.
Launching its initial public offering yesterday, Snap outlined aggressive expansion plans but is offering new investors no say on how the company is run and no promise of profits.
It would become the first US company to go public with no shares on offer granting voting rights to stock market investors. Its founders, Evan Spiegel and Robert Murphy, will keep control of the company.
Russ Mould, investment director at AJ Bell.said: “Investors who do wish to look closely at Snap must therefore be aware of the risks they are taking, as well as the potential upside, focusing on the firm’s plans to generate profits and cash rather than the hype, especially as the lack of voting rights and huge valuation leave them with little downside protection if anything does go awry.”
Snap, which launched itself in 2012 with an app that sends disappearing messages, rebranded itself last year as a camera company and started selling US$130 video camera glasses.
Users up, losses widen ..
The IPO document shows the number of Snap's daily active users grew to an average of 158mln at the end of December, up 48% year-on-year.
However, its net loss widened to US$514.6mln in 2016 from US$372.9mln the year before.
The group currently generates the majority of its revenue from advertising, and is seeking to challenge the dominance of internet giants such as Facebook Inc (NASDAQ:FB) and Alphabet Inc's Google (NASDAQ:GOOG).
Facebook's Instagram, which recently introduced disappearing video content similar to Snapchat, had 600mln users as of late last year.
Snap said it would use the proceeds from its IPO for general purposes, including working capital, operating expenses and capital expenditures.
The group, which could be worth up to US$25bn making it the biggest US tech float since Facebook, will list on the New York Stock Exchange under the ticker SNAP.
-- Adds broker comment --