Funding

R E V : M A R C H 8 , 2 0 1 8
Professor Marco Di Maggio prepared this case with the assistance of Josue Gil Deza. This case was developed from published sources. Funding for
the development of this case was provided by Harvard Business School and not by the company. HBS cases are developed solely as the basis for
class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.
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M A R C O D I M A G G I O
Snap Inc.’s IPO (A)
On March 1, 2017, Wall Street investors focused their attention on Snap Inc. (Snap). The Californiabased entity, self-described as a camera company,1 planned to make its debut on the New York Stock
Exchange (NYSE) the followings day in a highly anticipated initial public offering (IPO). Launched in
2011, by Evan Spiegel and Robert Murphy, Snap began as an appa that enabled users to share selfdeleting pictures. The app, later named Snapchat, grew rapidly over the next five and a half years,
acquiring more than 158 million daily active users (DAU).b,2 By 2017, the company aimed to become a
major player in the mobile advertising segment. Prior to its IPO, Snap raised more than $2.6 billion in
private funding, fetching valuations in excess of $20 billion.3
With a market hungry for large tech IPOs, investors hoped that Snap’s IPO would initiate a trend
among large tech companies looking to issue equity in 2017. Snap planned to sell up to 230 million
shares,c or 19.6% of the company. The market initially speculated that Snap would look for a valuation
upwards of $25 billion.4 Snap surprised the markets, pricing its IPO at $17 per share—a valuation of
$23.6 billion.5 Although higher than the $14 to $16 range outlined in early SEC filings, some industry
observers thought that Snap priced the IPO conservatively to attract investors potentially “squeamish
over too rich a price.”6 Others pointed out that the IPO was likely oversubscribed, and that the
company was issuing shares at essentially the same valuation as its last funding round.7 Did these
signs indicate that Snap’s share price would jump before trading even commenced?
Other investors remained skeptical, believing that the price was too high for a company that posted
losses of $515 million in 2016.8 In addition, the company continued to burn cash, generating a negative
operating cash flow of $611 million during the same reporting period.9 Competitors included
Facebook-owned Instagram, which had duplicated several of Snapchat’s core functions, and was close
to catching up in terms of users. Beyond competition, investors also voiced concerns with Snap’s
a “App” an abbreviation often used to describe a software program used on computer or phone operating systems.
b Snap defined a Daily Active User as “a registered Snapchat user who opens the Snapchat application at least once during a 24-
hour period. We measure average Daily Active Users for a particular quarter by calculating the average Daily Active Users for
the entire quarter.” Source: Snap, Inc., February 2, 2017 Form S-1 (filed February 2, 2017),
https://www.sec.gov/Archives/edgar/data/1564408/000119312517029199/d270216ds1.htm, accessed November 2017.
c This number included 200 million shares, plus a greenshoe provision for an additional 30 million shares. Altogether, the total
would be made up of about 160 million newly-issued shares, and 70 million from existing stockholders.
2
unprecedented decision to issue shares with no voting power whatsoever, allowing Spiegel and
Murphy to tightly control the business as it tackled the challenges ahead.10
Under these circumstances, investors continued to wonder, would Snap’s share price jump?
Initial Public Offerings11
An initial public offering, also referred to as going public, was the process through which a
privately-held company sold its equity shares to the public for the first time. The shares were then
traded in the public markets, or on a stock exchange. Companies usually went public to raise funds in
a manner that helped both improve access to capital, and provided greater liquidity for shareholders.12
The IPO process could take several months to more than a year, and began with the selection of one
or more investment banks to lead the process. These banks, known as the lead underwriters, worked
closely with the issuing company as it fulfilled legal requirements, including registration with national
regulators. In the U.S., this was the Securities and Exchange Commission (SEC).13
Underwriters also acted as the wholesalers for the shares being sold to the public. To facilitate this
process, lead underwriters often created a larger syndicate of banks, distributing the responsibility of
selling the shares across its members. The syndicate banks conducted visits to potential investors to
promote the company and gauge investor demand. Commonly referred to as the road show,
underwriters mainly targeted large institutional investors. Based on the expressions of interest from
potential investors and the company’s valuation, the lead underwriters and the company determined
a proper price for the shares, referred to as the IPO price. The IPO price often represented a discount
from the expected share price achieved during the first day of trading.14 All of the shares being offered
by the issuer were then bought by the underwriters, typically at a discount of 5% to 7% from the IPO
price, and thereafter sold to the subscribing investors at the IPO price. The spread of 5% to 7%
represented the investment banks’ commission, making an IPO an expensive proposition for the
company. Investment banks also helped create a market for the shares by ensuring there was enough
liquidity available at the start of trading.
Snap’s History
Evan Spiegel met Robert “Bobby” Murphy and Frank Reginald “Reggie” Brown IV at Stanford
University.15 In 2010, Spiegel and Murphy launched Future Freshman LLC, a platform that aimed to
help students and parents navigate the college admissions process.16 The venture failed to take off, but
undeterred the trio launched, Picaboo, a messaging app in 2011, with Spiegel as the chief executive
officer (CEO), Murphy as chief technology officer (CTO), and Brown as chief marketing officer
(CMO).17 An iOS app, Picaboo allowed users to share self-deleting pictures, controlling how long the
pictures would remain visible to the recipient. Brown reportedly came up with the idea of ephemeral
pictures and the ghost logo.18
While Picaboo showed potential, it had only gained 127 active users by the end of summer 2011.19
Tensions soon began to develop among the founding team, particularly regarding the division of
equity.20 Brown left the company in August 2011, later filing a lawsuit against Spiegel and Murphy.
The case settled in 2014, with Snap paying $157.5 million to Brown.21 In fall 2011, upon discovery that
a New Hampshire printing company utilized the name Picaboo, Murphy and Spiegel changed the
app’s name to Snapchat, but continued to utilize the signature ghost logo.22 Snapchat grew
exponentially, reaching 1,000 DAU by the end of 2011, and 100,000 DAU in 2012.23
3
Snapchat’s early success soon attracted investors, with Snapchat receiving a $485,000 investment
from Lightspeed Venture Partners in May 2012.24 Spiegel decided to drop out of Stanford to focus on
the project. Lightspeed’s investment allowed Snapchat to launch on Android and to add new features,
including video support.25 Competitors began to take notice. Mark Zuckerberg, CEO of Facebook,
reportedly met with Snapchat’s founding team in 2012. Shortly after the meeting, Facebook launched
a very similar app, Poke.26 The increased competition failed to curtail Snapchat’s growth. In February
2013, Snapchat raised an additional $13.5 million in Series A financing, led by Benchmark Capital,
giving the company a valuation between $60 and $70 million.27
Snapchat’s user base continued to grow, with users sharing 150 million images per day by April
2013.28 Without any developed revenue streams, questions over Snapchat’s long-term viability began
to arise. However, Snapchat continued to attract investors, raising an additional $80 million in a Series
B round at a valuation of $800 million in June 2013.29 This also coincided with a $20 million secondary
offering, allowing Spiegel and Murphy to cash in on the venture’s early success.30 Total daily snaps, or
self-deleting images, now reached 200 million.31 Snapchat again expanded its functionality, launching
the Story function that same year, which allowed users to share a collection of videos and photos.32
Snapchat’s user base continued to rapidly increase, particularly among teenagers and young adults.
By September 2013, 350 million photos were shared daily.33 Facebook reportedly tried to acquire
Snapchat, offering nearly $3 billion in cash that November.34 Spiegel rejected the offer even though
Snapchat remained unprofitable, still lacking any revenue sources.35 Instead, Snapchat raised an
additional $50 million in a Series C round of funding, on a valuation of approximately $2 billion in
December 2013.36 This funding coincided with the launch of a Smart Filter feature, giving Snapchat
users the capability to indicate time and temperature, as well as other variables, and the introduction
of the ability to replay snaps.37
In late 2013, security concerns around the app began to arise. Snapchat suffered a hack that exposed
4.6 million usernames and numbers in December 2013.38 A few weeks later, researchers discovered
vulnerabilities that would allow hackers to freeze phones by sending many snaps.39 Finally, Snapchat
settled a lawsuit brought by the Federal Trade Commission (FTC), in which it was alleged that
Snapchat had deceived users regarding the permanent deletion of photos and videos, since media
could be saved using third-party applications without the sender’s knowledge.40
In early 2014, Snapchat surpassed 50 million DAU. That June, Snapchat launched Our Story, which
allowed users to add their snaps to an events story, in addition to adding the snaps to the users personal
story. For the first time, anyone attending or associated with an event could add snaps directly to the
event’s stream.41 In November 2014, Snapchat introduced ads, and the first sponsored Our Story
collaborative live stream feature launched. Samsung paid an undisclosed amount to include Samsung
pictures and videos between the media uploaded by users attending the 2014 American Music Awards,
the first demonstration of how Snapchat planned to monetize its platform.42 This excitement was
translated into another funding round, raising $485 million from 23 investors in a Series D round, with
valuation reports ranging from $10 billion to up to $20 billion.43
Snapchat began to look externally for additional capabilities. It purchased Vergence Labs in March
2015, a company that developed smart glasses (called Epiphany Eyewear by Vergence), which were
camera glasses that could record video.44 It also acquired AddLive in May 2015 in order to power
Snapchat’s video chat feature.45 Soon after, Snapchat launched text and video chat features.46
In 2015, Snapchat surpassed 100 million DAU and introduced features called Geofilters, Lenses and
Discover, the latter being a channel guide serving media content alongside brand advertisements.
Partners in the project included National Geographic, Yahoo News, and ESPN.47 Snapchat also
4
reportedly raised $200 million in early 2015, at a valuation of $16 billion.48 Snap again used the proceeds
to upgrade the app, adding: Geofilters, which gave users the ability to design and brand a “creative
overlays” that told others where or what the user was doing; a Memories feature, which let users save
their Snaps and Stories; and the integration of Bitmojis, or personalized cartoon avatars, after Snap
acquired Bitstrips Inc. for approximately $100 million.49
In May 2016, the company closed a Series F round, raising a reported $1.8 billion at a valuation of
approximately $20 billion.50 That September, Snapchat introduced Spectacles—video capturing
sunglasses—its first hardware product. At the same time, Snapchat announced that the company
would be rebranding and renaming itself as simply Snap Inc.51 According to Snap’s chief strategy
officer, Imran Khan, “We rebranded our company to Snap Inc. because we are bigger than just one app
. . . Snap Inc. is a camera company—we believe that reinventing the camera represents our greatest
opportunity to improve the way people live and communicate.”52 For a timeline of Snap’s history and
pre-IPO funding rounds, see Exhibit 1 and Exhibit 2.
The Snap IPO53
In October 2016, rumors about a potential Snap IPO began to surface. Analysts indicated that the
company looked to raise approximately $3 billion, and provided wide estimates for its potential
valuation, ranging from $25 billion to $35 billion, with some predicting as much as $40 billion.54 In
February 2017, Snap announced its intention to pursue an IPO, filing the requisite documents with the
SEC. With Goldman Sachs and Morgan Stanley as its lead underwriters, Snap looked to sell 145 million
Class A shares at a target price of $14 to $16 per share. Existing shareholders planned to offer an
additional 55 million Class A shares. After the offering, Snap would have a total of 1.157 billion shares
outstanding.d Snapchat also gave the underwriters the right to offer up to an additional 30 millione
shares in a greenshoe provision—a clause that allowed underwriters to buy up to an additional 15% of
a company’s shares at the offering price if demand exceeded expectations.55
The company expected to receive approximately $2.1 billion56 in net proceeds from the offering
after subtraction of commissions and expenses. The offering aimed to give Snap greater liquidity and
a public market for its Class A stock. According to Snap’s S-1 filing, the net proceeds would be mainly
used for “general corporate purposes, such as working capital, operating expenses, and capital
expenditures. We may also use a portion of the net proceeds to acquire complimentary businesses,
products, services, or technologies.”57
Products58
Snap branded itself as a camera company, but the Snapchat app remained its core product (Exhibits
3 and Exhibit 4). The camera application enabled users to communicate through short videos and
pictures, which deleted automatically and were referred to as snaps. As of the time of Snap’s S-1 filing,
158 million DAU were creating an average of 2.5 billion daily snaps. Users could also personalize their
Snaps using multiple tools such as Lenses, Geofilters, and Bitmojis. Lenses were interactive animations
d The 1.157 billion shares outstanding did not account for additional shares that could be issued at later dates. It did include up
to 15.35 million shares of the greenshoe provision, 44.9 million stock options that had been previously granted to employees as
part of compensation plans, 156.1 million shares from compensation plans that had not yet vested, 3.7 million shares to be granted
to Spiegel after the closing of the IPO as part of additional compensation, and up to 355.5 million additional shares that would
be granted as part of future compensation plans.
e The shares of the greenshoe provision would include 15.35 million new shares and 14.65 million shares from existing
stockholders.
5
that were superimposed on a snap. Geofilters could be overlaid on snaps at specific locations. Bitmojis
were cartoon avatars of users, created in the Bitmoji application.
The app also included a Chat Service that enabled users to interact with each other through textbased chats, group chats, video calls, voice calls, stickers, and Bitmojis. On average, more than 60% of
DAU used the Chat Service every day, visiting Snapchat more than 18 times each day. The app also
provided a Storytelling Platform which enabled users to create collections of Snaps that played in
chronological order and self-deleted within 24 hours. Snapchat enabled the creation of different types
of stories, including My Story for each individual user; Live Stories, created by the community; and
Publisher Stories, created by Snapchat’s publisher partners. On average, more than 25% of DAU posted
to their Story every day. A Memories function enabled users to save their Snaps in a personal collection.
To complement the app, Snap offered Publisher Tools, content tools that allowed partners to build,
edit, and publish Snaps and attachments based their specific content. In this way, publishers and
advertisers had a touchpoint with DAUs. Snap also commercialized Spectacles, which were cameraenabled sunglasses that connected seamlessly with Snapchat and enabled users to create Snaps from a
human perspective.
Revenue Generation59
The prospectus highlighted two main advertising products—Sponsored Creative Tools and Snap
Ads with Attachments—that allowed Snap to generate revenue. Sponsored Creative Tools, included
Sponsored Lenses and Sponsored Geofilters that users could access when editing their Snaps or view
by watching friends’ Snaps that utilized this content. The Snap Ads (video advertisements) played in
the Stories feature. According to Snap, approximately 60% of the ads were viewed with the audio on.
Viewers could also engage with the ad through interactive attachments without leaving the Snapchat
application. Snap developed an advertising delivery framework to optimize the relevance of
advertisement impressions. The company also incorporated multiple proprietary and third-party tools
to measure advertisement effectiveness.
As the fastest growing advertising segment, mobile advertising presented a significant revenue
opportunity. In 2016, mobile advertising accounted for $66 billion, or 10% of the $652 billion in
worldwide advertising spend. By 2020, mobile advertising was projected to increase to $196 billion, or
25% of the expected $767 billion in worldwide advertising spend. Growth of the mobile advertising
segment would likely come at the expense of television and desktop computers, whose users were
expected to shift toward mobile technologies. The U.S. was expected to remain the main market,
accounting for 49% mobile advertising spend in 2016.
Financial Performance
Available financial information was limited to the two years prior to Snap’s filing. The data showed
that while Snap’s revenues were growing rapidly, the company had not yet managed to turn a profit.
For fiscal year 2016, Snap posted a net loss of $514.6 million on revenues of $404.5 million. (For
company financials, see Exhibit 5, Exhibit 6, and Exhibit 7.) The company had 158 million DAU across
three global regions: North America (43%), Europe (33%), and Rest of the World (24%), with quarterly
average revenue per user (ARPU) reaching $1.05 in the fourth quarter of 2016. Despite its initial rapid
acceptance, growth in total DAU appeared to be slowing.60 (For growth in quarterly DAU, see Exhibit
8; for DAU growth by region, see Exhibit 9.)
Snap Inc.’s IPO (A)
6
Capital Structure
Snap outlined its three classes of common stock (A, B, and C). On the topic of voting power for each,
the prospectus read:
Holders of our Class A common stock—the only class of stock being sold in this
offering—are entitled to no vote on matters submitted to our stockholders. Holders of our
Class B common stock are entitled to one vote per share. And holders of Class C common
stock are entitled to ten votes per share. Holders of shares of Class B common stock and
Class C common stock will vote together as a single class on all matters (including the
election of directors) submitted to a vote of stockholders.61
While publicly traded classes of non-voting stock were common in other U.S. companies, this
offering would represent the first time a company attempted an IPO comprised entirely of non-voting
stock. Moreover, given the expected resulting shareholder structure, Spiegel and Murphy would
effectively retain full control of the company:
[They] will be able to exercise voting rights with respect to an aggregate of 215,887,848
shares of Class C common stock, which will represent approximately 88.5% of the voting
power [. . .]. As a result, Mr. Spiegel and Mr. Murphy, and potentially either one of them
alone, have the ability to control the outcome of all matters submitted to our stockholders
for approval, including the election, removal, and replacement of directors and any
merger, consolidation, or sale of all or substantially all of our assets.62
Furthermore, Spiegel and Murphy would theoretically be able to continue exercising their influence
through voting power even in the case of termination of their employment.
Investors were expected to gain returns only through share price appreciation, since thus far Snap
had never paid a cash dividend and indicated it would not start doing so after going public as it
intended to retain future earnings to finance operations and expansions. Snap also indicated that lockup periods of 150 days after the prospectus date were in place for the holders of the remaining
outstanding shares.63
Competitive Landscape64
Snap faced significant competition both in the U.S. and overseas. Perhaps its strongest and most
worrisome competitors were Facebook and Twitter. Like Snap, both of these U.S. based platforms
generated the majority of their revenues via advertising.65
As of December 2016, Facebook, achieved 1.23 billion DAU.66 Facebook generated nearly $27 billion
in annual revenues in 2016, mostly from advertising.67 Mobile advertising represented nearly 85% of
all its advertising revenues.68 Facebook also controlled Instagram, the biggest direct challenger to
Snapchat. Instagram ran a mobile-based social network that was gradually developing several
functions very similar to those of Snapchat. For example, in August 2016, Instagram launched Stories,
a feature that enabled users to post disappearing picture and video-based stories in a manner very
similar to Snapchat’s My Story. By January 2017, the Stories feature had 150 million DAU and was on
track to surpass Snapchat before the end of the year. Stories was not the only function similar to
Snapchat in the Instagram platform, which also included filters to personalize pictures and videos.69
7
Twitter’s platform also enabled that enabled real-time interaction. The network was often used to share
news and opinions, potentially challenging Snapchat’s Discover function. For data on how Snap compared
to Facebook, Twitter and other key competitors immediately prior to Snap’s IPO see Exhibit 10a.
Although most often compared to Facebook and Twitter, Snap also competed against several other
high growth advertising platforms. For example, Google’s YouTube challenged Snapchat’s video
sharing functions. Competitors to Snapchat’s chat function were vast, to include: Whatsapp (controlled
by Facebook), Apple’s Messages, and Facebook Message in the U.S. Worldwide, competitors included
Line, and Tencent’s WeChat, which had more than 700 million monthly active users.70 For data on
other competitors and other high growth comparables, see Exhibit 10b.
Key Risks
Snap faced several challenges. First, potential competition from other players in the market could
affect Snap’s ability to grow its consumer base, and its growth rate had already begun to slow down.
Additionally, the majority of snap users were between the ages of 18-34,71 with the most active users
being under the age of 25. A lack of brand or app loyalty by users in these demographics could hinder
Snap’s ability to grow as well as maintain its user base. Finally, Snap derived substantially all of its
revenue from third party advertising. However, Snap lacked any long-term advertising commitments,
which meant that Snap needed to continue to find ways to attract, maintain and increase the average
advertiser spend.72
Snap also depended on Google Cloud. Google provided an internet-based computing service, with
networked remote servers for data storage, processing, and online access, commonly referred to as a
cloud computing service.73 Snap ran most of its computing on Google Cloud, and switching providers
would be onerous.74 Snap anticipated expenses of $2 billion with Google Cloud over the next five years.
It also had commitments of over $1 billion with Amazon Web Services over the same period.75
Attracting talent, particularly engineers, posed another significant challenge. The landscape was
highly competitive, and the negative perception of Snap’s culture as opaque and controlling further
impacted its ability to attract talent.76 For example, the company was run from multiple private houses
in Venice Beach, California; the lack of a centralized headquarters impaired communication and might
make it difficult to scale the company. Its founders avoided the media almost to a fault: “Spiegel seems
to regard the media as some sort of enemy; Murphy’s media profile is almost non-existent,”77 wrote
one observer.
The U.S. IPO Landscape in 2017
In 2016, the S&P 500 index hit record highs and average IPO returns were up 23% from the offering
price, the best performance since 2013. Despite these indicators, many viewed 2016 as a bad year for
U.S. IPOs, as they watched IPO activity fall to its lowest level since 2009. In 2016, only 105 IPOs occurred
raising a total of $18.8 billion, compared to 170 IPOs raising a total $30 billion in the prior year. Annual
IPO proceeds dropped 37% year over year to their lowest level since 2003.78 (For data on the U.S. IPO
market and landscape, see Exhibit 11a, Exhibit 11b, and Exhibit 11c).
Snap Inc.’s IPO (A)
8
Analysts identified several contributing factors, in particular higher levels of uncertainty, generated
by geopolitical developments such as Brexitf and the U.S. presidential election.79 Furthermore, interest
rates remained low, making debt a more attractive source of funding for expanding businesses.80 Yet
none of the above factors explained “the 800-pound gorilla still in the room: the two-year drought in
technology IPOs, the bread and butter of the IPO market.”81
Some industry observers expected the IPO market to rebound in 2017, due to the improved economic
outlook and more clarity on U.S. President Donald Trump’s policies. The Federal Reserve increased
interest rates for only the second time since the financial crisis at the end of 2016, and the expectations
was that rates would continue to climb in 2017. Moreover, several large private equity funds were nearing
their exits after holding investments for five to six years. However, the main source of improved
expectations for the IPO market came from multiple tech decacornsg likely going public in 2017.82
Why So Few Tech IPOs?
There were two explanations for the recent drought of tech IPOs. First, private investors were using
alternative exit strategies and were often holding on to their investments for longer periods. Second,
mergers and acquisitions activity had removed many companies from the IPO pipeline. In 2016, for
example, “The payment processor TransFirst and security software vendors BlueCoat and Optiv all
had previously filed for IPOs before withdrawing their applications due to mergers and
acquisitions.”83 In early 2017, Cisco bought AppDynamics for $3.7 billion a few days before its planned
IPO.84
Companies were staying private for longer periods of time due to several reasons. Chief amongst
them was a disparity between public and private valuations. Many large tech companies achieved high
valuations based on profit potential, rather than actual results. In some cases, public markets had not
validated those high valuations. Some private investors held companies until they grew big enough to
justify high valuations in the public markets, or accepted lower valuations due to their urgency to
exit.85
The abundance of private capital funds, which usually provided a cheaper and faster way to access
capital, also made tech companies reluctant to go public.86 The cost of an IPO was significant, incurred
in the underwriter spread and in a discounted initial trading price. The IPO process also took several
months. Private funding provided not only an alternative route to gain liquidity, but also reduced the
pressure on management teams to deliver short-term results that was usually associated with public
markets, enabling them to focus on long-term strategy.87
Even when tech companies chose to proceed with an IPO, fear of pressure from public market
investors to deliver short-term results was evident in companies’ offering structure. It was not uncommon
for companies to institute a multiple-class share structure, under which the publically traded shares had
a lesser voting power than the shares retained by management and private investors, despite the fact that
this approach potentially impacted share prices.88 The Snap offering represented an extreme version of
this approach, in that none of the shares offered in the IPO would have voting rights.
f “Brexit” the merging of the words “British” and “exit” was a term used to describe the possibility of the United Kingdom
leaving the European Union. The United Kingdom held a referendum on June 23, 2016 in which 52% of its electorate voted to
“leave” the European Union.
g Analyst used the term “decacorn” to describe companies with valuations in excess of $10 billion.
Snap Inc.’s IPO (A)
9
Institutional Investors’ Response
Some institutional investors with a passive investment structure pressured the exchanges for rule
changes that would limit, or even prohibit, companies from listing with non-voting shares. Otherwise
they would be forced to invest in shares with limited voting power, were any of those companies to
become part of an index. Passive investors also began to push for the creation of new indexes that only
listed corporations with voting share structures. David Blitzer, chairman of the index committee at S&P
Dow Jones Indices, considered this a viable possibility: “We had people who want to invest with a
particular index but excluding firearm companies, so if we can do that, we can do this,” he said.89
New Approaches
There were several other trends that could potentially change the IPO landscape. Spotify, the digital
music and media streaming service, was reportedly exploring an option known as direct listing. Under
a direct listing, the company would not issue new shares nor seek to raise additional funds. It would
just list its shares in a stock exchange. This path would reduce dilution for existing shareholders,
significantly reduce the costs of a deal in comparison to an IPO, and did not limit current executives’
capability to sell shares in the short-term.90
Another possibility was the creation of Special Purpose Acquisition Companies (SPACs), such as
Social Capital Hedosophia Holdings (SCHH).91 SPACs were publicly-traded entities that raised funds,
described as “a blank check,”92 to later acquire a private company. These were relatively new
developments to the tech startup scene.93 An acquisition by a SPAC enabled a private company to go
public while circumventing the IPO process. This allowed the acquired target to gain liquidity faster,
and at a lower cost. In 2017, SCHH raised $600 million with the goal of investing in tech unicorns.94
A group in Silicon Valley wished to create a new U.S. stock exchange that catered to companies and
investors focused on long-term results. The Long-term Stock Exchange (LTSE) would impose more
stringent requirements than those currently required by the SEC. The most salient one was tenured
voting power, in which the voting power of a share would increase the longer it had been held by the
same shareholder.95 It also would impose a new approach to corporate governance by prohibiting
companies to tie executive bonuses to financial-performance targets of less than one year, and require
a full vesting period of at least five years for shares paid as executive compensation.96
Was Snap’s Price Right?
As Snap’s IPO date approached, Investors remained torn on the true value of Snap. There were
several favorable factors: Snap’s revenue engine, the mobile advertising segment, was already of
significant size, predicted to triple by 2020, growing to $196 billion globally (Exhibit 12a and Exhibit
12b). However, competition in the digital advertising market remained strong, with Google and
Facebook accounting for 31% and 12% respectively in 2016 (Exhibit 12c).
Snapchat boasted a stronger user base than Twitter, with 158 million DAU, or 58% more than
Twitter had at the time of its IPO. Snap’s users also represented a younger population of millennials,
which the more traditional players were having a harder time reaching. Additionally, Snap’s primarily
addressable market (people between 13-44 years of age who were online regularly) still had significant
penetration room. One analyst estimated that in 2016, globally only 13% of this demographic used
Snap, and in North America it was estimated at 39%.97
10
Snap had proven it could come up with creative products, such as My Story, and it had also shown
that it was capable of pursuing hardware launches, as exemplified by Spectacles. Interest from
institutional investors remained very high, to the point that in the hours prior to the IPO, the
underwriters adjusted the final price to $17 per share, above the targeted price.98
However, many investors remained skeptical. The first and biggest concern was the company’s
valuation. While the total valuation at $17 per share was somewhat lower than what the media had
speculated, this value could quickly increase on the opening of trading, given that it was known that
institutional investors heavily oversubscribed the IPO. With so much uncertainty, some observers
studied and compared Snap to the performance and multiples of its closest competitors at the time of
and immediately after their IPOs. Would Snap follow a path similar to that of Twitter, trading at high
multiples immediately post IPO? Or would it mimic Facebook, which, “cratered out of the gate . . .”99
(See Exhibit 13a and 13b).
Even at $17, there were several factors that indicated the valuation might be too high. In terms of
its price-to-sales ratio, the Snap IPO was bound to be one of the most, if not the most, expensive tech
IPO ever (Exhibit 14).100,101
Snap remained unprofitable, and it burned a significant amount of cash in 2016. (For financial data
on Snap compared to its competitors’ at the time of their respective IPOs see Exhibit 15) Therefore, a
major portion of its value came from the expectation that Snap would be able to monetize and continue
to grow its user base. In terms of monetization, it still significantly lagged Facebook. Worldwide
average revenue per user (ARPU) for Snap stood at $1.05 in the fourth quarter of 2016, compared to
$4.83 per Facebook user. In the U.S., Snap’s biggest market, its ARPU stood at $2.15 during the same
period, almost 10 times lower than Facebook’s $19.81 (Exhibit 16a and Exhibit 16b). Snap would need
to increase its ad load (defined as advertisements per DAU, per hour) in order to compete. According
to one report, Snap’s 2016 ad load was 0.6 advertisements per daily average user per hour. This lagged
Facebook, Twitter and Instagram who boasted ad loads of approximately 50, 100 and 7 respectively.102
Moreover, Snap’s quarterly DAU growth of 3.26% placed it at a much slower pace than those of
Facebook and Twitter at their IPO dates (Exhibit 17).103
Another concern was the significant control both co-founders would retain in the company. Spiegel
and Murphy, 26 years old and 28 years old, respectively, at the time of the IPO, would retain control
of most of the voting shares (for a list of board members and their biographies, see Exhibit 18a and
Exhibit 18b). Investors were concerned that they wouldn’t have a say as the company tried to grow
dramatically and become profitable in a highly competitive landscape.104
Would Snap’s Shares Jump?
Many questions remained. How much was Snap truly worth? Would Snap deliver on its growth?
How concerning were its governance issues? All of this would play a part in Snap’s early days of
trading. The market watched closely as Snap’s shares began to trade.
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Exhibit 1 Snap Inc. Timeline Images
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Source: Snap, Inc., February 2, 2017 Form S-1 (filed February 2, 2017), https://www.sec.gov/Archives/edgar/data/
1564408/000119312517029199/d270216ds1.htm, accessed November 2017.
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Exhibit 2 Snap Inc. Pre-IPO Reported Funding History (in millions of USD)
Source: Adapted from “Snap Inc. Funding History,” https://www.crunchbase.com/organization/snapchat/funding-rounds,
accessed July 2017.
Note: — Indicates amounts or parties which were not disclosed.
Exhibit 3 Company Positioning
Source: Snap, Inc. February 2, 2017 Form S-1 (filed February 2, 2017), https://www.sec.gov/Archives/edgar/data/
1564408/000119312517029199/d270216ds1.htm, accessed November 2017.
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Exhibit 4 Product Images
Source: Snap, Inc. February 2, 2017 Form S-1 (filed February 2, 2017), p. 92, https://www.sec.gov/Archives/edgar/data/
1564408/000119312517029199/d270216ds1.htm, accessed November 2017.
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Exhibit 5 Snap Inc. Income Statements, 2015-2017 (in millions of USD, except per share items)
For the fiscal period ending
12 months
Dec-31-2015
12 months
Dec-31-2016
6 months
Jun-30-2017
Currency USD USD USD
Revenue 58.7 404.5 331.3
Other Revenue – – –
Total Revenue 58.7 404.5 331.3
Cost Of Goods Sold 182.3 451.7 315.5
Gross Profit (123.7) (47.2) 15.8
Selling General & Admin Exp. 159.4 289.5 1,617.0
R & D Exp. 82.2 183.7 1,061.6
Depreciation & Amort. – – –
Other Operating Expense/(Income) – – –
Other Operating Exp., Total 241.7 473.2 2,678.6
Operating Income (365.3) (520.4) (2,662.8)
Interest Expense – (1.4) (1.7)
Interest and Invest. Income 1.4 4.7 8.8
Net Interest Exp. 1.4 3.2 7.1
Income/(Loss) from Affiliates (0.5) (3.9)
Other Non-Operating Inc. (Exp.) 0.3 (1.0) 1.0
EBT Excl. Unusual Items (364.1) (522.1) (2,654.7)
Merger & Related Restruct. Charges (16.4) –
Impairment of Goodwill – – –
Gain (Loss) On Sale Of Invest. – 0.4 0.0
Other Unusual Items – – –
EBT Incl. Unusual Items (380.5) (521.7) (2,654.7)
Income Tax Expense (7.6) (7.1) (2.8)
Earnings from Cont. Ops. (372.9) (514.6) (2,651.9)
Earnings of Discontinued Ops. – – –
Extraord. Item & Account. Change – – –
Net Income to Company (372.9) (514.6) (2,651.9)
Minority Int. in Earnings – – –
Net Income (372.9) (514.6) (2,651.9)
Pref. Dividends and Other Adj. – – –
NI to Common Incl Extra Items (372.9) (514.6) (2,651.9)
NI to Common Excl. Extra Items (372.9) (514.6) (2,651.9)
Per Share Items
Basic EPS ($0.51) ($0.64) ($2.43)
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For the fiscal period ending
12 months
Dec-31-2015
12 months
Dec-31-2016
6 months
Jun-30-2017
Basic EPS Excl. Extra Items (0.51) (0.64) (2.43)
Weighted Avg. Basic Shares Out. 732.2 807.9 1,090.8
Diluted EPS ($0.51) ($0.64) ($2.43)
Diluted EPS Excl. Extra Items (0.51) (0.64) (2.43)
Weighted Avg. Diluted Shares Out. 732.2 807.9 1,090.8
Normalized Basic EPS ($0.31) ($0.4) ($1.52)
Normalized Diluted EPS (0.31) (0.4) (1.52)
Dividends per Share NA NA NA
Supplemental Items
EBITDA (350.0) (491.3) (2,637.8)
EBITA (355.8) (504.2) (2,651.6)
EBIT (365.3) (520.4) (2,662.8)
EBITDAR (338.7) (464.4) (2,613.1)
Effective Tax Rate % NM NM NM
Current Domestic Taxes 0.0 0.0
Current Foreign Taxes 0.1 0.9
Total Current Taxes 0.1 0.9
Deferred Domestic Taxes (7.7) (7.1)
Deferred Foreign Taxes NA (0.8)
Total Deferred Taxes (7.7) (8.0)
Normalized Net Income (227.6) (326.3) (1,659.2)
Filing Date Feb-02-2017 Feb-02-2017 Aug-11-2017
Restatement Type NC O O
Calculation Type REP REP REP
Supplemental Operating Expense Items
Selling and Marketing Exp. 27.2 124.4 310.6
General and Administrative Exp. 132.2 165.2 1,306.4
R&D Exp. 82.2 183.7 1,061.6
Net Rental Exp. 11.3 26.9 24.7
Imputed Oper. Lease Interest Exp. – 21.4
Imputed Oper. Lease Depreciation – 5.5
Stock-Based Comp., COGS 0.5 0.5 21.9
Stock-Based Comp., R&D Exp. 10.3 21.9 881.9
Stock-Based Comp., S&M Exp. 3.5 4.0 180.3
Stock-Based Comp., G&A Exp. 59.2 5.4 1,153.0
Stock-Based Comp., Total 73.5 31.8 2,237.1
Currency USD USD USD
Exchange Rate 1.0 1.0 1.0
Conversion Method H H H
Source: Company Income Statement, Capital IQ, Inc., a division of Standard & Poor’s.
Note: For multiple class companies, per share items are primary class equivalent, and for foreign companies listed as primary
ADRs, per share items are ADR-equivalent.
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Exhibit 6 Snap Inc. Balance Sheets, 2015-2017
Balance Sheet as of Dec-31-2015 Dec-31-2016 Jun-30-2017 (Q2)
Currency USD USD USD
ASSETS
Cash And Equivalents 640.8 150.1 501.7
Short Term Investments – 837.2 2,295.9
Total Cash & ST Investments 640.8 987.4 2,797.6
Accounts Receivable 44.3 162.7 171.5
Total Receivables 44.3 162.7 171.5
Prepaid Exp. 7.4 30.0 77.8
Other Current Assets – – –
Total Current Assets 692.6 1,180.0 3,046.9
Gross Property, Plant & Equipment 50.8 118.4
Accumulated Depreciation (6.7) (17.8)
Net Property, Plant & Equipment 44.1 100.6 128.0
Long-term Investments 9.1 11.8
Goodwill 133.9 319.1 502.8
Other Intangibles 43.2 76.0 136.0
Other Long-Term Assets 16.0 35.3 61.7
Total Assets 938.9 1,722.8 3,875.5
LIABILITIES
Accounts Payable 0.7 8.4 17.8
Accrued Exp. 10.0 34.6 240.5
Curr. Income Taxes Payable 1.1 9.3
Other Current Liabilities 144.5 104.5 –
Total Current Liabilities 156.3 156.7 258.3
Capital Leases 13.5 15.1 15.7
Other Non-Current Liabilities 5.0 32.0 60.6
Total Liabilities 174.8 203.9 334.6
Pref. Stock, Convertible 0.0 0.0 0.0
Total Pref. Equity 0.0 0.0 0.0
Common Stock 0.0 0.0 0.0
Additional Paid In Capital 1,467.4 2,728.8 7,400.8
Retained Earnings (693.2) (1,207.9) (3,863.5)
Treasury Stock – – –
Comprehensive Inc. and Other (10.0) (2.1) 3.6
Total Common Equity 764.1 1,518.9 3,540.9
Total Equity 764.1 1,518.9 3,540.9
Total Liabilities And Equity 938.9 1,722.8 3,875.5
Supplemental Items
Total Shares Out. on Filing Date 753.9 836.1 1,197.2
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Balance Sheet as of Dec-31-2015 Dec-31-2016 Jun-30-2017 (Q2)
Total Shares Out. on Balance Sheet Date 753.9 836.1 1,180.0
Book Value/Share $1.01 $1.82 $3.0
Tangible Book Value 587.0 1,123.8 2,902.1
Tangible Book Value/Share $0.78 $1.34 $2.46
Total Debt 13.5 15.1 15.7
Net Debt (627.3) (972.2) (2,781.9)
Debt Equivalent Oper. Leases 90.4 215.2 –
Inventory Method NA Avg Cost –
Land 4.6 4.6 –
Buildings 5.5 36.9 –
Machinery 18.4 43.0 –
Construction in Progress 19.7 20.8 –
Leasehold Improvements 2.5 13.2 –
Full Time Employees 600 1,859 –
Filing Date Feb-02-2017 Feb-02-2017 Aug-11-2017
Restatement Type NC O O
Calculation Type REP REP REP
Currency USD USD USD
Exchange Rate 1.0 1.0 1.0
Conversion Method H H H
Source: Company Balance Sheet, Capital IQ, Inc., a division of Standard & Poor’s.
Note: For multiple class companies, total share counts are primary equivalent, and for foreign companies listed as primary
ADRs, total share counts are ADR-equivalent.
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Exhibit 7 Snap Inc. Cash Flow Statements, 2015-2017
For the Fiscal Period Ending
12 months
Dec-31-2015
12 months
Dec-31-2016
6 months
Jun-30-2017
Currency USD USD USD
Net Income (372.9) (514.6) (2,651.9)
Depreciation & Amort. 5.8 12.9 13.8
Amort. of Goodwill and Intangibles 9.5 16.2 11.2
Depreciation & Amort., Total 15.3 29.1 25.0
Stock-Based Compensation 73.5 31.8 2,237.1
Other Operating Activities (7.1) (7.1) (3.4)
Change in Acc. Receivable (41.9) (118.4) (8.2)
Change in Acc. Payable (6.7) 6.5 9.3
Change in Other Net Operating Assets 33.1 (38.5) 27.5
Cash from Ops. (306.6) (611.2) (364.6)
Capital Expenditure (19.2) (66.4) (37.4)
Cash Acquisitions (48.7) (104.0) (224.2)
Divestitures – – –
Sale (Purchase) of Intangible assets (9.1) (0.6) (7.7)
Invest. in Marketable & Equity Securt. (9.6) (843.3) (1,465.3)
Net (Inc.) Dec. in Loans Originated/Sold – – –
Other Investing Activities (14.4) (7.0) 9.9
Cash from Investing (100.9) (1,021.3) (1,724.7)
Short Term Debt Issued – 5.0 –
Long-Term Debt Issued – – –
Total Debt Issued – 5.0 –
Short Term Debt Repaid – (5.0) –
Long-Term Debt Repaid – – –
Total Debt Repaid – (5.0) –
Issuance of Common Stock 651.4 1,157.9 2,658.6
Repurchase of Common Stock (1.0) (10.6) (208.4)
Total Dividends Paid – – –
Special Dividend Paid – – –
Other Financing Activities – (5.4) (9.4)
Cash from Financing 650.4 1,141.9 2,440.8
Net Change in Cash 242.8 (490.7) 351.6
Supplemental Items
Cash Interest Paid NA NA NA
Cash Taxes Paid 0.0 1.7 5.5
Levered Free Cash Flow NA (472.6) 596.7
Unlevered Free Cash Flow NA (471.7) 597.7
Change in Net Working Capital NA 140.4 (44.9)
Net Debt Issued NA 0 NA
Filing Date Feb-02-2017 Feb-02-2017 Aug-11-2017
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For the Fiscal Period Ending
12 months
Dec-31-2015
12 months
Dec-31-2016
6 months
Jun-30-2017
Restatement Type NC O O
Calculation Type REP REP REP
Currency USD USD USD
Exchange Rate 1.0 1.0 1.0
Conversion Method H H H
Source: Company cash flow statements, Capital IQ, Inc., a division of Standard & Poor’s.
Exhibit 8 Snap Inc. Quarterly Average Daily Active Users
Source: Snap, Inc. February 2, 2017 Form S-1 (filed February 2, 2017), p. 64, https://www.sec.gov/
Archives/edgar/data/1564408/000119312517029199/d270216ds1.htm, accessed November 2017.
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Exhibit 9 Snap Inc. Quarterly Average DAU by Region

14
18 20 23
27 29 30
34
38
46 49 52
0
10
20
30
40
50
60
Europe

6
9 11 13
16 18 20
24
29
36
39 39
50
10
15
20
25
30
35
40
45
Rest of World

Q1
’14
Q2
’14
Q3
’14
Q4
’14
Q1
’15
Q2
’15
Q3
’15
Q4
’15
Q1
’16
Q2
’16
Q3
’16
Q4
’16
1345%367% 302% 136% 85% 37% 51% 47% 47% 80% 85% 53%
Q1 ’14Q2 ’14Q3 ’14Q4 ’14Q1 ’15Q2 ’15Q3 ’15Q4 ’15Q1 ’16Q2 ’16Q3 ’16Q4 ’16
1010% 411% 280% 330% 182% 107% 87% 82% 83% 99% 88% 58%
Source: Snap, Inc. February 2, 2017 Form S-1 (filed February 2, 2017), p. 64, https://www.sec.gov/
Archives/edgar/data/1564408/000119312517029199/d270216ds1.htm, accessed November 2017.
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Exhibit 10a Key Statistics: Snap Inc. vs. Key Competitors, March 1, 2017 (dollars in millions)
Source: Company Comp Set, Capital IQ, Inc., a division of Standard & Poor’s, accessed February 2018.
Exhibit 10b Comparable Companies, March 27, 2017 (dollars in millions, except share price)
Source: J.P. Morgan, “Snap Inc.: Strong Engagement & Monetization Headroom; But Still Much to Prove at Current Valuation;
Initiating Neutral & $24 PT,” March 27, 2017, via Capital IQ, accessed November 2017.
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Exhibit 11a U.S. IPO Activity, 2004 to 2017
Source: “U.S. IPO Market, 2017 Annual Review,” Renaissance Capital, January 2, 2018,
http://www.renaissancecapital.com/review/2017USReview.pdf?inf_contact_key=4cba20ba8a76c74accaecc47c6db9
998d3f0e503f107744851ded45ccf097a76, accessed February 2018.
Note: Data set includes IPOs with a market cap above $50 million, and excludes closed-end funds, unit offerings and SPACs.
Proceeds totals do not include the exercise of underwriter over-allotments.
Exhibit 11b Annual IPO Proceeds Fall to Lowest Level Since 2003
IPO Volume 2009 2010 2011 2012 2013 2014 2015 2016
Number of deals 63 154 124 128 222 275 170 105
Proceeds raised
(U.S. billions)
21.9 38.7 35.5 42.6 54.9 85.3 30.0 18.8
Median deal size
(U.S. millions)
155 108 160 124 126 100 94 95
PE-backed deals 22 38 35 45 68 71 39 30
PE-backed proceeds
(U.S. billions)
6.5 9.6 20.4 10.3 24.5 25.0 11.3 8.8
VC-backed deals 12 61 51 46 82 126 85 42
VC-backed proceeds
(U.S. billions)
1.3 6.0 7.9 20.7 9.7 35.3 8.9 3.5
Source: “U.S. IPO Market, 2016 Annual Review,” Renaissance Capital, December 16, 2016,
http://www.renaissancecapital.com/review/2016usreview.pdf, accessed November 2017.
Note: Includes private equity and venture capital backed IPOs. 2016 data cover IPOs through December 15, 2016.
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Exhibit 11c Mega-Tech Companies in the Private Pipeline
Company Business Funding Estimated Valuation
Uber Smartphone app for on-demand
transportation service
$13,100 $68,000
Snap Mobile app for ephemeral messaging
and photo sharing
$3,000 $25,000
Palantir Government and financial data analytics
platform
$2,440 $20,150
Pinterest Pinboard-style social photo sharing
website
$1,320 $11,000
Dropbox Web-based cloud storage provider $607 $10,000
Spotify Subscription-based music streaming
service
$1,176 $8,530
Airbnb Provides a global network of
accommodations offered by locals
$3,000 $30,000
WeWork Outfits and leases shared office space,
primarily for startups
$1,690 $16,900
SoFi Peer-to-peer lending platform for
student loan financing
$1,420 $4,000
Source: “U.S. IPO Market, 2016 Annual Review,” Renaissance Capital, December 16, 2016,
http://www.renaissancecapital.com/review/2016usreview.pdf, accessed November 2017.
Note: Funding and estimated valuation figures are in millions of U.S. dollars.
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Exhibit 12a Total and Mobile Advertising Spend (in billions of USD), Top 10 Advertising Markets
Total Advertising Spend Mobile Advertising Spend
Country 2016 2020 2016 2020
U.S. 254.8 291.4 32.4 88.8
China 86.4 109.7 12.0 55.1
Japan 38.8 40.0 2.3 3.6
UK 23.5 26.3 4.1 9.8
Germany 17.9 21.0 1.1 3.0
France 12.3 14.3 0.8 2.2
Australia 11.9 14.2 1.4 4.5
Brazil 10.6 12.7 0.2 0.7
Canada 8.5 11.9 1.0 2.9
Italy 8.2 9.4 0.7 2.3
Source: Adapted from IDC data in Snap, Inc. February 2, 2017 Form S-1 (filed February 2, 2017), p. 118,
https://www.sec.gov/Archives/edgar/data/1564408/000119312517029199/d270216ds1.htm (IDC), accessed
November 2017.
Note: China excludes Hong Kong.
Exhibit 12b Mobile Advertising Growth over Time
Source: IDC data cited in Snap, Inc. February 2, 2017 Form S-1 (filed February 2, 2017), p. 116,
https://www.sec.gov/Archives/edgar/data/1564408/000119312517029199/d270216ds1.htm (IDC), accessed
November 2017.
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Exhibit 12c Key Players Market Share of the Global Digital Advertising Market, 2016
Source: Aswath Damodaran, “My Snap Story: Valuing Snap ahead of it’s IPO!,” Blog: Musing on Market, February 17, 2017,
http://aswathdamodaran.blogspot.com/2017/02/a-snap-story-valuing-snap-ahead-of-its.html, accessed February
2018.
Exhibit 13a Comparable Trading Multiples: Utilizing Year 1 and Year 2 Revenues Post IPO
Source: Adapted from Barclays Equity Research, “Snap, Inc. Swiping In Front Of The Competition,” March 28, 2017, via
Capital IQ, accessed February 2018.
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Exhibit 13b Competitors’ Performance Metrics, Post IPO
Source: Aswath Damodaran, “My Snap Story: Valuing Snap ahead of it’s IPO!,” Blog: Musing on Market, February 17, 2017,
http://aswathdamodaran.blogspot.com/2017/02/a-snap-story-valuing-snap-ahead-of-its.html, accessed February 2018.
Exhibit 14 Price-to-Sales Ratio at Time of IPO (selected technology companies)
Source: Adapted from Bloomberg and SEC filings cited in Jen Wieczner, “The Snapchat IPO Just Got a Lot Cheaper,” Fortune,
February 16, 2017, http://fortune.com/2017/02/16/snapchat-ipo-snap-stock-price/, accessed November 2017.
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Exhibit 15 Key Statistics: Snap Inc. vs. Competitors, at Respective IPO Dates ($ in millions)
Source: Adapted from Aswath Damodaran, “My Snap Story: Valuing Snap ahead of it’s IPO!,” Blog: Musing on Market,
February 17, 2017, http://aswathdamodaran.blogspot.com/2017/02/a-snap-story-valuing-snap-ahead-of-its.html,
accessed February 2018, and Google Inc., August 18, 2004, Final Prospectus, (filed August 18, 2004),
https://www.sec.gov/Archives/edgar/data/1288776/000119312504143377/d424b4.htm#toc59330_11; LinkedIn
Corporation, Prospectus, (filed May 19, 2011), https://www.sec.gov/Archives/edgar/data/1271024/
000119312511145240/d424b4.htm; Facebook Inc., Prospectus, (filed May 18, 2012), https://www.sec.gov/Archives/
edgar/data/1326801/000119312512240111/d287954d424b4.htm; Twitter Inc., Prospectus, (filed November 7, 2013),
https://www.sec.gov/Archives/edgar/data/1418091/000119312513431301/d564001d424b4.htm#toc564001_11; and
Snap Inc., February 2, 2017 Form S-1 (filed February 2, 2017), https://www.sec.gov/Archives/edgar/data/1564408/
000119312517029199/d270216ds1.htm, all accessed February 2018.

Note:
The Daily Active User data is for the most recent time period reported in each company’s respective prospectus. The
financial data is from the reported results for the most recent fiscal year end prior to each company’s respective IPO

date: Google for the year ended December 31, 2003; LinkedIn December 31, 2010; Facebook December 31, 2011; Twitter
December 31, 2012; and Snap December 31, 2016.
Exhibit 16a Snap Inc. Quarterly Average Revenue Per User (ARPU)
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
Global North America Europe Rest of World
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
Source: Adapted from Facebook company documents cited in Alexei Oreskovic, “Look at the Big Gap Between Snapchat’s
Revenue Per User and Facebook’s,” Business Insider, http://www.businessinsider.com/snapchat-arpu-versusfacebook-arpu-charts-2017-5, accessed November 2017.
Note: Figures are unaudited. North America includes Mexico and the Caribbean. Europe includes Russia and Turkey. ARPU
is defined as quarterly revenue divided by the average DAU.
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Exhibit 16b Facebook Quarterly Average Revenue Per User (ARPU)
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
$16.00
$18.00
$20.00
Global U.S. & Canada Europe Asia-Pacific Rest of World
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
Source: Adapted from Facebook company documents cited in Alexei Oreskovic, “Look at the Big Gap Between Snapchat’s
Revenue Per User and Facebook’s,” Business Insider, http://www.businessinsider.com/snapchat-arpu-versusfacebook-arpu-charts-2017-5, accessed November 2017.
Exhibit 17 Comparison of Major Tech Companies at Time of IPO
Source: Adapted from Don Dion, “Beware of the Snap IPO: We Fear Its Value Could Disappear As Quickly As Its Messages,”
Seeking Alpha, March 1, 2017, https://seekingalpha.com/article/4050941-beware-snap-ipo-fear-value-disappearquickly-messages, accessed November 2017 and Facebook Inc., Prospectus, (filed May 18, 2012): Twitter Inc.,
Prospectus, (filed November 7, 2013); Snap Inc., February 2, 2017 Form S-1 (filed February 2, 2017), all accessed
February 2018.
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Exhibit 18a Executive Officers and Directors, Snap, Inc.
The following table sets forth information for our directors and executive officers, and their ages as
of December 31, 2016.
Name Age Position
Executive Officers:
Evan Spiegel 26 Co-Founder, Chief Executive Officer, and Director
Robert Murphy 28 Co-Founder, Chief Technology Officer, and Director
Imran Khan 39 Chief Strategy Officer
Andrew Vollero 50 Chief Financial Officer
Chris Handman 44 General Counsel
Timothy Sehn 36 Senior Vice President of Engineering
Steven Horowitz 49 Vice President of Engineering
Non-Employee Directors:
Michael Lyntona b 57 Director and Chairman of the Board
Joanna Colesb 54 Director
A.G. Lafleya b 69 Director
Mitchell Lasky 54 Director
Stanley Meresmanc 70 Director
Scott D. Millera c 64 Director
Christopher Youngc 44 Director
Source: Snap, Inc., February 2, 2017 Form S-1 (filed February 2, 2017), p. 125, https://www.sec.gov/
Archives/edgar/data/1564408/000119312517029199/d270216ds1.htm, accessed November 2017.
a Member of the compensation committee.
b Member of the nominating and corporate governance committee.
c Member of the audit committee.
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Exhibit 18b Biographies of Snap, Inc.’s Leadership
Executive Officers
Evan Spiegel Mr. Spiegel is our co-founder and has served as our Chief Executive Officer and a
member of our board of directors since May 2012. We believe that Mr. Spiegel is qualified to serve as a
member of our board based on the perspective and experience he brings as our co-founder and Chief
Executive Officer.
Robert Murphy Mr. Murphy is our co-founder and has served as our Chief Technology Officer
and a member of our board of directors since May 2012. Mr. Murphy holds a B.S. in Mathematical and
Computational Science from Stanford University. We believe that Mr. Murphy is qualified to serve as
a member of our board of directors based on the perspective and experience he brings as our co-founder
and Chief Technology Officer.
Imran Khan Mr. Khan has served as our Chief Strategy Officer since January 2015. From May
2011 to January 2015, Mr. Khan served as a Managing Director in the Investment Banking Division at
Credit Suisse. From March 2004 to May 2011, Mr. Khan was an Equity Analyst at J.P. Morgan Securities
Inc. Mr. Khan holds a B.S.B.A. in Finance and Economics from the University of Denver.
Andrew Vollero Mr. Vollero has served as our Chief Financial Officer since February 2016 and
previously served as our Vice President, Finance since August 2015. From September 2000 to August
2015, Mr. Vollero was employed at Mattel, Inc., a toy manufacturing company, where he served as the
Senior Vice President, Corporate Strategy, Development & Investor Relations from September 2005 to
August 2015 and Division CFO, Senior Vice President, Finance and Strategy from September 2000 to
September 2005. Mr. Vollero holds a B.A. in Mathematics and Economics from Yale University and a
Master of Science in Management from Oxford University.
Chris Handman Mr. Handman has served as our General Counsel since May 2014. From March
2000 to April 2014, Mr. Handman was a partner in the Supreme Court and Appellate Litigation group
at Hogan Lovells LLP in Washington, D.C. Earlier in his career, Mr. Handman served as a law clerk for
Judge Patricia M. Wald of the U.S. Court of Appeals for the D.C. Circuit and Judge Colleen KollarKotelly of the U.S. District Court for the District of Columbia. Mr. Handman holds a J.D. from Yale Law
School and a B.A. in both Political Science and International Relations from American University.
Timothy Sehn Mr. Sehn has served as our Senior Vice President of Engineering since September
2013. Prior to joining Snap Inc., Mr. Sehn was employed at Amazon.com, Inc., an e-commerce
company, from September 2003 to September 2010, where he held various positions, including as
Director of Software Development from September 2010 to September 2013. Mr. Sehn holds a B.A.Sc.
from the University of Waterloo.
Steven Horowitz Mr. Horowitz has served as our Vice President of Engineering since January
2015. Prior to joining Snap Inc., Mr. Horowitz served as Senior Vice President of Software Engineering
at Motorola Mobility, LLC, formerly a Google company, from December 2012 through January 2015.
From January 2009 through November 2012, Mr. Horowitz served as Chief Technology Officer for
Quotient Technology, Inc., a consumer technologies company. Prior to that he worked at Google,
Microsoft, and Apple. Mr. Horowitz holds a B.A. from the University of Michigan, Ann Arbor.
Mr. Horowitz is also a member of the board of directors of Quotient Technology, Inc.
Snap Inc.’s IPO (A)
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Non-Employee Directors
Michael Lynton Mr. Lynton has served on our board of directors since April 2013 and has been
Chairman of our board of directors since September 2016. Mr. Lynton served as Chief Executive Officer
of Sony Entertainment Inc., an international entertainment company, from April 2012 until February
2017, and has served as Chairman and Chief Executive Officer of Sony Pictures Entertainment since
January 2004. Mr. Lynton has also served as a member of the board of directors of Ares Management,
L.P. since 2014. Mr. Lynton holds a B.A. in History and Literature from Harvard College and an M.B.A.
from Harvard Business School. We believe that Mr. Lynton is qualified to serve as a member of our
board of directors and Chairman due to his extensive leadership experience.
Joanna Coles Ms. Coles has served on our board of directors since December 2015. Ms. Coles
was appointed Chief Content Officer of Hearst Magazines in September 2016, overseeing editorial for
Hearst’s 300 titles globally. Prior to that she was Editor-in-Chief of Cosmopolitan, a role she started in
September 2012. She edited Marie Claire magazine from April 2006 to September 2012. Ms. Coles
worked for The Times of London from September 1998 to September 2001 and served as New York
Bureau Chief for The Guardian from 1997 to 1998. She is on the board of Women Entrepreneurs New
York City, an initiative to encourage female entrepreneurship, with a focus on underserved
communities. Ms. Coles holds a B.A. in English and American literature from the University of East
Anglia. We believe that Ms. Coles is qualified to serve as a member of our board of directors due to her
extensive experience working with content providers and advertisers.
A.G. Lafley Mr. Lafley has served on our board of directors since July 2016. Mr. Lafley has held
various positions within The Procter & Gamble Company since 1977 and served as its President, Chief
Executive Officer, and as a member of the board of directors from June 2000 until June 2009 and again
from May 2013 to June 2016. He also served as Chairman of the Board from July 2002 to January 2010.
From April 2010 to May 2013, Mr. Lafley served as a consultant and as a Senior Adviser at Clayton,
Dubilier & Rice, LLC, a private equity firm. Mr. Lafley holds an A.B. from Hamilton College and an
M.B.A. from Harvard Business School. We believe that Mr. Lafley is qualified to serve as a member of
our board of directors due to his extensive leadership experience.
Mitchell Lasky Mr. Lasky has served on our board of directors since December 2012. Mr. Lasky
has been a partner at Benchmark, a venture capital firm, since April 2007. From November 2000 to
February 2006, Mr. Lasky served as Chief Executive Officer of JAMDAT Mobile, Inc., a publicly traded
mobile games company, and served as Executive Vice President, Mobile & Online at Electronic Arts, a
video game company, after it acquired JAMDAT in February 2006, until April 2007. Mr. Lasky holds a
B.A. in History and Literature from Harvard College and a J.D. from the University of Virginia School
of Law. We believe Mr. Lasky is qualified to serve as a member of our board of directors due to his
extensive experience with social media and technology companies, as well as his experience as a
venture capitalist investing in technology companies.
Stanley Meresman Mr. Meresman has served on our board of directors since July 2015. During
the last ten years, Mr. Meresman has served on the boards of directors of various public and private
companies, including service as chair of the audit committee for some of these companies. He currently
serves on the board of directors, and as chair of the audit committee, of Palo Alto Networks, Inc. He
served as a member of the board of directors of LinkedIn Corporation from October 2010 to December
2016, Zynga Inc. from June 2011 to June 2015, Meru Networks, Inc. from September 2010 to May 2013,
and Riverbed Technologies, Inc. from March 2005 to May 2012. From January 2004 to December 2004,
Mr. Meresman was a Venture Partner with Technology Crossover Ventures, a private equity firm, and
was General Partner and Chief Operating Officer of Technology Crossover Ventures from November
Snap Inc.’s IPO (A)
33
2001 to December 2003. During the four years before joining Technology Crossover Ventures,
Mr. Meresman was a private investor and board member and advisor to several technology companies.
From 1989 to 1997, Mr. Meresman served as the Senior Vice President and Chief Financial Officer of
Silicon Graphics, Inc. Mr. Meresman holds a B.S. in Industrial Engineering and Operations Research
from the University of California, Berkeley and an M.B.A. from the Stanford Graduate School of
Business. We believe that Mr. Meresman is qualified to serve as a member of our board of directors
and chair of our audit committee due to his background as a member of the board and chair of the
audit committee of other public companies and his financial and accounting expertise from his prior
extensive experience as chief financial officer of two publicly traded companies.
Scott D. Miller Mr. Miller has served on our board of directors since October 2016. Mr. Miller
is a founder and Chief Executive Officer of G100 Companies, which operates G100 Network and SSA
& Company. Before joining G100 Companies in March 2004, Mr. Miller was employed at Hyatt Hotels
Corporation, a global hospitality company, where he served as non-executive vice chairman from
August 2003 to December 2004, president from January 1999 to August 2003, and executive vice
president from September 1997 to July 2003. Mr. Miller currently serves on the board of directors of
QTS Realty Trust, Inc. and served on the boards of Affinion Group, Inc. from 2011 to 2013, AXA
Equitable Life Insurance Company from 2002 to 2012, Orbitz Worldwide, Inc. from 2003 to 2004, and
NAVTEQ corporation from 2002 to 2006. He also serves on several private company boards. Mr. Miller
holds a B.S. in Human Biology from Stanford University and an M.B.A. from the University of Chicago.
We believe that Mr. Miller is qualified to serve as a member of our board of directors due to his
extensive leadership experience.
Christopher Young Mr. Young has served on our board of directors since October 2016. Since
October 2014, Mr. Young has served as Senior Vice President and General Manager, Intel Security
Group at Intel Corporation, a multinational technology company. From November 2011 to September
2014, Mr. Young served as Senior Vice President, Security & Government Group at Cisco Systems, Inc.
a technology networking company. From August 2010 to October 2011, Mr. Young served as Senior
Vice President & General Manager, End User Computing at VMware, Inc., a software company. From
January 2011 to August 2016, Mr. Young served on the board of directors of Rapid7, Inc., a security
software company. Mr. Young holds a B.A. in Public Policy from Princeton University and an M.B.A.
from Harvard Business School. We believe that Mr. Young is qualified to serve as a member of our
board of directors due to his extensive experience with technology companies.
There are no family relationships among any of the directors or executive officers.
Source: Snap, Inc., February 2, 2017 Form S-1 (filed February 2, 2017), p. 125-127, https://www.sec.gov/
Archives/edgar/data/1564408/000119312517029199/d270216ds1.htm, accessed November 2017.
Snap Inc.’s IPO (A)
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Endnotes
1 Snap Inc., “Company Profile,” https://investor.snap.com/company-profile, accessed January 2018.
2 Snap Inc., February 2, 2017 Form S-1 (filed February 2, 2017),
https://www.sec.gov/Archives/edgar/data/1564408/000119312517029199/d270216ds1.htm, accessed November 2017.
3 See, for example, Ingrid Lunden, “Snapchat Raised $1.8B In a Series F Round; Leaked Deck Reveals Revenues, User
Numbers,” Techcrunch.com, May 26, 2016, https://techcrunch.com/2016/05/26/snapchat-series-f/, accessed November 2017.
4 Jen Wieczner, “The Snapchat IPO Just Got a Lot Cheaper,” Fortune, February 16, 2017,
http://fortune.com/2017/02/16/snapchat-ipo-snap-stock-price/, accessed November 2017.
5 Kathleen Chaykowski, “Snap Prices IPO Above Range At $17 A Share, Valuing Company at $24 Billion, Forbes, March 1, 2017,
https://www.forbes.com/sites/kathleenchaykowski/2017/03/01/report-snap-set-to-price-ipo-above-range-at-17-a-sharevaluing-company-at-24-billion/#8217a9334aba, accessed January 2018.
6 Jen Wieczner, “The Snapchat IPO Just Got a Lot Cheaper,” Fortune, February 16, 2017,
http://fortune.com/2017/02/16/snapchat-ipo-snap-stock-price/, accessed November 2017.
7 Jen Wieczner, “The Snapchat IPO Just Got a Lot Cheaper,” Fortune, February 16, 2017,
http://fortune.com/2017/02/16/snapchat-ipo-snap-stock-price/, accessed November 2017.
8 Jen Wieczner, “The Snapchat IPO Just Got a Lot Cheaper,” Fortune, February 16, 2017,
http://fortune.com/2017/02/16/snapchat-ipo-snap-stock-price/, accessed November 2017.
9 Company cash flow statements, Capital IQ, Inc., a division of Standard & Poor’s.
10 Jefferson Graham, “Snap Shares Surge 44% in IPO Debut,” USA Today Online, March 3, 2017, via Factiva, accessed
November 2017.
11 This section relies heavily on Jonathan Berk and Peter De Marzo, Corporate Finance 4th Edition (Boston: Pearson, 2017),
Chapter 23, “Raising Equity Capital.” pp. 828-864, and “How IPOs Work,” Briefing Investor,
https://www.briefing.com/investor/learning-center/general-concepts/how-ipos-work/ and Mark Koba, “Initial Public
Offerings: CNBC Explains,” CNBC, April 20, 2012, https://www.cnbc.com/id/47099278, all accessed November 2017.
12 Mark Koba, “Initial Public Offerings: CNBC Explains,” CNBC, April 20, 2012, https://www.cnbc.com/id/47099278,
accessed November 2017.
13 Ramana Nanda, Robert White and Lauren G. Pickle, “Square, Inc. IPO,” HBS No. 817-054 (Boston: Harvard Business School
Publishing, 2017), pp. 1-2, 9.
14 Ramana Nanda, Robert White and Lauren G. Pickle, “Square, Inc. IPO,” HBS No. 817-054 (Boston: Harvard Business School
Publishing, 2017), pp. 1-2, 9.
15 Andrew Nusca, “Snapchat: An Abridged History,” Fortune, February 5, 2017, http://fortune.com/2017/02/04/snapchatabridged-history/, accessed November 2017.
16 Andrew Nusca, “Snapchat: An Abridged History,” Fortune, February 5, 2017, http://fortune.com/2017/02/04/snapchatabridged-history/, accessed November 2017.
17 Andrew Nusca, “Snapchat: An Abridged History,” Fortune, February 5, 2017, http://fortune.com/2017/02/04/snapchatabridged-history/, accessed November 2017.
18 Jim Edwards, “The alleged betrayal in these photos, texts and emails cost Snapchat $158 million,” February 3, 2017,
http://www.businessinsider.com/snapchat-founders-lawsuit-internal-photos-texts-emails-2017-2, accessed November 2017.
19 Jordan Crook, Anna Escher, “A Brief History of Snapchat,” Techcrunch, October 15, 2015,
https://techcrunch.com/gallery/a-brief-history-of-snapchat/slide/12/, accessed November 2017.
20 Jordan Crook, Anna Escher, “A Brief History of Snapchat,” Techcrunch, October 15, 2015,
https://techcrunch.com/gallery/a-brief-history-of-snapchat/slide/13/, accessed November 2017.
21 Jim Edwards, “The alleged betrayal in these photos, texts and emails cost Snapchat $158 million,” February 3, 2017,
http://www.businessinsider.com/snapchat-founders-lawsuit-internal-photos-texts-emails-2017-2, accessed November 2017.
22 Andrew Nusca, “Snapchat: An Abridged History,” Fortune, February 5, 2017, http://fortune.com/2017/02/04/snapchatabridged-history/, accessed November 2017.
Snap Inc.’s IPO (A)
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23 Snap, Inc., February 2, 2017 Form S-1 (filed February 2, 2017),
https://www.sec.gov/Archives/edgar/data/1564408/000119312517029199/d270216ds1.htm, accessed November 2017.
24 Alyson Shontell, “How Snapchat’s First Investor—whose stake is now worth $2 billion—found Snapchat when it had less
than $100,000 users,” Business Insider, March 2, 2017, http://www.businessinsider.com/how-lightspeeds-jeremy-liew-becamesnapchats-first-investor-2017-2, accessed November 2017.
25 Andrew Nusca, “Snapchat: An Abridged History,” Fortune, February 5, 2017, http://fortune.com/2017/02/04/snapchatabridged-history/, accessed November 2017.
26 Andrew Nusca, “Snapchat: An Abridged History,” Fortune, February 5, 2017, http://fortune.com/2017/02/04/snapchatabridged-history/, accessed November 2017.
27 Billy Gallagher, “Snapchat Raises $13.5 Million Series A Led by Benchmark, Now Sees 60M Snaps a Day,” Techcrunch.com,
February 8, 2013, https://techcrunch.com/2013/02/08/snapchat-raises-13-5m-series-a-led-by-benchmark-now-sees-60msnaps-sent-per-day/, accessed November 2017.
28 Chris Velazco, “Snapchat Now Sees 150M Images Shared Each Day, But Questions of Profitability Still Linger,”
Techcrunch.com, April 16, 2013, https://techcrunch.com/2013/04/16/snapchat-now-sees-150m-images-shared-each-day-butquestions-of-viability-still-linger/, accessed November 2017.
29 Alexia Tsotsis, “Snapchat Snaps Up an $80M Series B Led by IVP At An $800M Valuation,” Techcrunch.com, June 22, 2013,
https://techcrunch.com/2013/06/22/source-snapchat-snaps-up-80m-from-ivp-at-a-800m-valuation/, accessed November 2017.
30 Alexia Tsotsis, “Snapchat Snaps Up an $80M Series B Led by IVP At An $800M Valuation,” Techcrunch.com, June 22, 2013,
https://techcrunch.com/2013/06/22/source-snapchat-snaps-up-80m-from-ivp-at-a-800m-valuation/, accessed November 2017.
31 Mike Isaac, “Snapchat Closes $60 Million Round Led by IVP, Now at $200 Million Daily Snaps,” WSJ.com, June 24, 2013,
http://allthingsd.com/20130624/snapchat-closes-60-million-round-led-by-ivp-now-at-200-million-daily-snaps/, accessed
November 2017.
32 Snap, Inc., February 2, 2017 Form S-1 (filed February 2, 2017),
https://www.sec.gov/Archives/edgar/data/1564408/000119312517029199/d270216ds1.htm, accessed November 2017.
33 Billy Gallagher, “Snapchat Now Sees 350M Photos Shared Daily, Up From 200M in June,” Techcrunch.com, September 9,
2013, https://techcrunch.com/2013/09/09/snapchat-now-sees-350m-photos-shared-daily-up-from-200m-in-june/, accessed
November 2017.
34 Evelyn M. Rusli and Douglas MacMillan, “Snapchat Spurned $3 Billion Acquisition Offer From Facebook,” WSJ.com,
November 13, 2013, https://blogs.wsj.com/digits/2013/11/13/snapchat-spurned-3-billion-acquisition-offer-from-facebook/,
accessed November 2017.
35 Matthew Braga, “Snapchat Turns Down US$3 Billion Cash Takeover From Facebook,” National Post, November 14, 2013, via
Factiva, accessed November 2017.
36 J.J. Colao, “Hedge Fund Invests $50M Into Snapchat,” Forbes.com, December 11, 2013, https://www.forbes.com/
sites/jjcolao/2013/12/11/hedge-fund-invests-50-million-into-snapchat/#3b46e75a24c9, accessed November 2017.
37 Jordan Crook, Anna Escher, “A Brief History of Snapchat,” Techcrunch.com, October 15, 2015,
https://techcrunch.com/gallery/a-brief-history-of-snapchat/slide/39/, accessed November 2017.
38 Catherine Shu, “Confirmed: Snapchat Hack Not a Hoax, 4.6M Usernames and Numbers Published,” Techcrunch.com,
December 31, 2013, https://techcrunch.com/2013/12/31/hackers-claim-to-publish-list-of-4-6m-snapchat-usernames-andnumbers/, accessed November 2017.
39 Salvador Rodriguez, “Hackers Can Use Snapchat To Disable iPhones, Researcher Says,” L.A. Times, February 7, 2014,
http://beta.latimes.com/business/technology/la-fi-tn-snapchat-shut-down-iphone-20140207-story.html#axzz2sfZoxSCT,
accessed November 2017.
40 Andrea Peterson, “Snapchat Agrees to Settle FTC Charges That It Deceived Users,” The Washington Post, May 8, 2014,
https://www.washingtonpost.com/news/the-switch/wp/2014/05/08/snapchat-agrees-to-settle-ftc-charges-that-it-deceivedusers/?utm_term=.f24c21f3e815, accessed November 2017.
41 Jordan Crook, Anna Escher, “A Brief History of Snapchat,” Techcrunch.com, October 15, 2015,
https://techcrunch.com/gallery/a-brief-history-of-snapchat/slide/48/, accessed November 2017.
42 Josh Constine, “Snapchat’s Newest Money Maker Is a Sponsored Our Story For Samsung and the AMAs,” Techcrunch.com,
November 23, 2014, https://techcrunch.com/2014/11/23/snapchat-sponsored-our-story/, accessed November 2017.
Snap Inc.’s IPO (A)
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43 Ingrid Lunden, “Snapchat Has Raised $485 Million More From 23 Investors, At Valuation of Up To $20 Billion,”
Techcrunch.com, https://techcrunch.com/2014/12/31/snapchat-485m/, accessed November 2017.
44 Trevor Mogg, “Snapchat Quietly Put Down $15 million for a Company That Makes Smart Glasses,” DigitalTrends.com,
December 18, 2014, https://www.digitaltrends.com/social-media/snapchat-secretly-acquired-a-company-that-makes-smartglasses/, accessed November 2017.
45 Ellis Hamburger, “Snapchat Made a Secret Acquisition to Power Its New Video Chat,” Theverge.com, May 2, 2014,
https://www.theverge.com/2014/5/2/5676196/snapchat-acquires-addlive-video-chat, accessed November 2017.
46 Jordan Crook, Anna Escher, “A Brief History of Snapchat,” Techcrunch.com, October 15, 2015,
https://techcrunch.com/gallery/a-brief-history-of-snapchat/slide/45/, accessed November 2017.
47 Jordan Crook, Anna Escher, “A Brief History of Snapchat,” Techcrunch.com, October 15, 2015,
https://techcrunch.com/gallery/a-brief-history-of-snapchat/slide/56/, accessed November 2017.
48 Serena Saitto, “Snapchat is Raising Money from Alibaba at a $15M Valuation,” Bloomberg, March 11, 2015,
https://www.bloomberg.com/news/articles/2015-03-11/alibaba-said-to-plan-snapchat-funding-at-15-billion-valuation,
accessed November 2017.
49 Douglas MacMillan, “Snapchat Buys Bitmoji App for More Than $100 Million,” WSJ.com, March 25, 2016,
https://www.wsj.com/articles/snapchat-buys-bitmoji-app-for-more-than-100-million-1458876017, accessed November 2017.
50 Ingrid Lunden, “Snapchat Raised $1.8B In a Series F Round; Leaked Deck Reveals Revenues, User Numbers,”
Techcrunch.com, May 26, 2016, https://techcrunch.com/2016/05/26/snapchat-series-f/, accessed November 2017.
51 Kathleen Chaykowski, “Snapchat Leaps Into Hardware, Rebrands as ‘Snap Inc.’,” Forbes.com, September 14, 2016,
https://www.forbes.com/sites/kathleenchaykowski/2016/09/24/snapchat-leaps-into-hardware-rebrands-as-snapinc/#530e49ab6f55, accessed November 2017.
52 Imran Khan, Snap Inc. Chief Strategy Officer, quoted in, Lauren Johnson, “CSO Imran Khan Explains Snapchat’s Rebrand to
Snap Inc.,” ADWeek , September 26, 2016, http://www.adweek.com/digital/cso-imran-khan-explains-snapchat-s-rebrandsnap-inc-173719/, accessed January 2018.
53 This section relies heavily on Snap, Inc., February 2, 2017 Form S-1 (filed February 2, 2017),
https://www.sec.gov/Archives/edgar/data/1564408/000119312517029199/d270216ds1.htm, accessed November 2017.
54 Alex Barinka and Sara Frier, “Snapchat Seeks to Raise as Much as $4 Billion in IPO,” Bloomberg.com, October 26, 2016,
https://www.bloomberg.com/news/articles/2016-10-26/snapchat-said-to-seek-to-raise-as-much-as-4-billion-in-ipo, accessed
November 2017.
55 Amendment No. 3 to Snap, Inc. Form S-1 (filed February 24, 2017),
https://www.sec.gov/Archives/edgar/data/1564408/000119312517056992/d270216ds1a.htm#rom270216_19, p. 176,
accessed November 2017.
56 Arjun Kharpal, “Snapchat Parent Snap Sees Up to $22.2 Billion Valuation After Pricing IPO at $14 and $16 per Share,”
CNBC, https://www.cnbc.com/2017/02/16/snapchat-parent-snap-ipo-price-valuation.html, accessed November 2017.
57 Snap, Inc. February 2, 2017 Form S-1 (filed February 2, 2017),
https://www.sec.gov/Archives/edgar/data/1564408/000119312517029199/d270216ds1.htm, p. 7, accessed November 2017.
58 This section relies heavily on Our Products, Snap, Inc. February 2, 2017 Form S-1 (filed February 2, 2017),
https://www.sec.gov/Archives/edgar/data/1564408/000119312517029199/d270216ds1.htm, pp. 1-2, accessed November 2017.
59 This section relies heavily on Snap, Inc. February 2, 2017 Form S-1 (filed February 2, 2017), https://www.sec.gov/
Archives/edgar/data/1564408/000119312517029199/d270216ds1.htm, pp. 3, 121-123 accessed November 2017.
60 Snap, Inc. February 2, 2017 Form S-1 (filed February 2, 2017), https://www.sec.gov/Archives/edgar/data/
1564408/000119312517029199/d270216ds1.htm, pp. 3, 63, accessed November 2017.
61 Snap, Inc. February 2, 2017 Form S-1 (filed February 2, 2017),
https://www.sec.gov/Archives/edgar/data/1564408/000119312517029199/d270216ds1.htm, p. 4, accessed November 2017.
62 Snap, Inc. February 2, 2017 Form S-1 (filed February 2, 2017),
https://www.sec.gov/Archives/edgar/data/1564408/000119312517029199/d270216ds1.htm, p. 3, accessed November 2017.
63 Snap, Inc. February 2, 2017 Form S-1 (filed February 2, 2017),
https://www.sec.gov/Archives/edgar/data/1564408/000119312517029199/d270216ds1.htm, p. 39, accessed November 2017.
Snap Inc.’s IPO (A)
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64 This section draws heavily from Snap, Inc. February 2, 2017 Form S-1 (filed February 2, 2017),
https://www.sec.gov/Archives/edgar/data/1564408/000119312517029199/d270216ds1.htm, p. 18, accessed November 2017.
65 J.P. Morgan, “Snap Inc.: Strong Engagement & Monetization Headroom; But Still Much to Prove at Current Valuation;
Initiating Neutral & $24 PT,” March 27, 2017, via Capital IQ, accessed November 2017.
66 Fourth Quarter and Full Year 2016 Financial Highlights, press release, Facebook, February 1, 2017,
https://investor.fb.com/investor-news/press-release-details/2017/facebook-Reports-Fourth-Quarter-and-Full-Year-2016-
Results/default.aspx, accessed November 2017.
67 Fourth Quarter and Full Year 2016 Financial Highlights, press release, Facebook, February 1, 2017,
https://investor.fb.com/investor-news/press-release-details/2017/facebook-Reports-Fourth-Quarter-and-Full-Year-2016-
Results/default.aspx, accessed November 2017.
68 Fourth Quarter and Full Year 2016 Financial Highlights, press release, Facebook, February 1, 2017,
https://investor.fb.com/investor-news/press-release-details/2017/facebook-Reports-Fourth-Quarter-and-Full-Year-2016-
Results/default.aspx, accessed November 2017.
69 Michelle Castillo, “Facebook’s Instagram Stories Crushes Snapchat with 250 million DAU,” CNBC, June 20, 2017,
https://www.cnbc.com/2017/06/20/instagram-crushes-snapchats-daily-active-users-rate.html, accessed November 2017.
70 “WeChat’s World,” The Economist, August 6, 2016, https://www.economist.com/news/business/21703428-chinas-wechatshows-way-social-medias-future-wechats-world, accessed November 2017.
71 Snap, Inc. February 2, 2017 Form S-1 (filed February 2, 2017),
https://www.sec.gov/Archives/edgar/data/1564408/000119312517029199/d270216ds1.htm, p. 12, accessed November 2017.
72 Quora.com contributor, “What Are the Most Surprising Things in Snapchat’s S-1?” Forbes.com, February 3, 2017,
https://www.forbes.com/sites/quora/2017/02/03/what-are-the-most-surprising-things-in-snapchats-s-1/#5fb938a5f2d6,
and Snap, Inc. February 2, 2017 Form S-1 (filed February 2, 2017), https://www.sec.gov/Archives/edgar/data/1564408/
000119312517029199/d270216ds1.htm, p. 18, both accessed November 2017.accessed November 2017.
73 See “cloud computing,” http://www.dictionary.com/browse/cloud-computing?s=t, accessed November 2018.
74 Snap, Inc. February 2, 2017 Form S-1 (filed February 2, 2017),
https://www.sec.gov/Archives/edgar/data/1564408/000119312517029199/d270216ds1.htm, p. 68, accessed November 2017.
75 Don Dion, “Beware of the Snap IPO: We Fear Its Value Could Disappear As Quickly As Its Messages,” Seeking Alpha,
March 1, 2017, https://seekingalpha.com/article/4050941-beware-snap-ipo-fear-value-disappear-quickly-messages, accessed
November 2017.
76 Quora.com contributor, “What Are the Most Surprising Things in Snapchat’s S-1?” Forbes.com, February 3, 2017,
https://www.forbes.com/sites/quora/2017/02/03/what-are-the-most-surprising-things-in-snapchats-s-1/#5fb938a5f2d6,
accessed November 2017.
77 Jim Edwards, “Secrecy, Control, and ‘Kindness’: What the Snapchat IPO Tells Us About Its Corporate Culture,” Business
Insider, February 3, 2017, http://www.businessinsider.com/snapchat-ipo-company-culture-2017-2, accessed November 2017.
78 All figures in this paragraph are from U.S. IPO Market, 2016 Annual Review, Renaissance Capital, December 16, 2016,
http://www.renaissancecapital.com/review/2016usreview.pdf, accessed November 2017.
79 U.S. IPO Market, 2016 Annual Review, Renaissance Capital, December 16, 2016,
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80 Sweta Singh, “U.S. IPOs Set to Rebound After Dismal 2016,” Reuters, December 14, 2016, https://www.reuters.com/
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Snap Inc.’s IPO (A)
38
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