Rumors of Snapchat — now Snap Inc — going public have been circulating the industry for weeks, and it seems that the Venice, California-based social media giant has already initiated the execution phase of the plan to offer its shares on the US stock market. As Reported by Reuters, sources close to the company are claiming that Snap has filed for an initial public offering (IPO) with the US Securities and Exchange Commission (SEC) last Tuesday. The filing was made confidentially because that's what the US Jumpstart Our Business Startups Act allows to startups with less than $1 billion in annual revenue.
Furthermore, the same sources corroborate reports from October according to which Snap Inc will initially be valued at $20 billion or more. This would make the Venice-based company's IPO the largest one since Alibaba Group Holding debuted on the stock market in 2014, valued at over $170 billion. For added context, this would also be the most valuable US technology IPO since Facebook went public in 2012 with an estimated value of more than $81 billion.
As for what this exactly means, the short version is that Snap Inc will likely be ready to go public in approximately three months. The IPO procedure itself encompasses a SEC review following the first filing which lasts up to 30 days. After the review, the company has five days to respond to the comments made by SEC, which is followed by a second SEC review lasting as long as 15 days. The second response from the company that wants to go public must be made in three days, after which the SEC is conducting a final review which lasts one week, at most. The firm then has 48 hours to issue a final response. Once that is said and done, the show can finally begin. Quite literally, at that, because the next step is to organize a so-called "road show" which lasts for a week or two tours major financial centers with the goal of generating interest in the company. The actual trading begins a day after the road show is finished. In other words, the IPO process itself usually lasts for 10 to 12 weeks. Provided this report from Reuters is accurate, Snap Inc is currently waiting for the initial SEC review which is due in about three weeks, which means that the company should be ready to go public by March of 2017, just like first rumors from October suggested.