Skip to Content

Snap Is Going Public—Offering Ideas, Not Profits

The company hopes that its disappearing messages, first-person video, and AR will make it seem like an exciting visionary—rather than a loss-maker.
February 3, 2017

Snap, the parent company of the social messaging company Snapchat, has filed the paperwork required for its initial public offering.

The company, cofounded by Evan Spiegel, who was one of our 35 Innovators Under 35 last year, is thought to be seeking to raise $3 billion on a valuation of up to $25 billion. It’s expected to go public in March. If all goes to plan, it will be the largest tech IPO since Alibaba in September 2014.

The company’s flagship product, Snapchat, is based firmly around the now: capture a moment, share it, and watch it disappear. It was originally designed as a one-to-one communication tool to send photos and later added video. Then the app allowed people to share stories with larger groups, and also enabled brands to post disappearing articles for people to see. Much of this content can be bedecked with what Snap calls lenses—photo and video filters, most of which are saccharine or silly.

So far, the playful, ephemeral approach has worked: the app has over 158 million active users.

But Snap’s IPO paperwork reveals that, despite generating $404.5 million in revenue in 2016, in total it made a loss of $514.6 million. While it has started generating income via placing ads in stories and asking brands to sponsors lenses, it’s also been spending heavily. Perhaps most notable is the fact that it doesn’t run its own farm of servers, instead running its operations on Google’s Cloud Platform service. And a deal inked last month commits it to spending $400 million per year for the privilege over the next five years.

Immediate profit, then, doesn’t appear to be what Snap is offering to investors. Instead it’s proposing a slice of something much less tangible: vision. Snap doesn’t see itself as a social media company or a messaging service. It would rather you think of it as a camera company with the overarching goal of, as it says, “reinventing the camera” to help people “express themselves, live in the moment, learn about the world, and have fun together.”

But it’s also pushing new technologies and ideas hard. While disappearing messages are its bread and butter, it’s dreaming up new ways to acquire and deliver its evanescent content. So it’s selling its own smart glasses to capture first-person video, building augmented reality into its app, and developing weird and wonderful new ways to make its experience sticky (read: sell more ads).

Snap is clearly brimming with ideas, then, if not profits. The only question is: are people in the market for vision, or are they worried that the successes it breeds might be just as transient as the content they’re centered around? It looks like we'll find out later this year.

(Read more: “Why Snap’s Spectacles Are Going to (Finally) Make Life Logging Cool,” “35 Innovators Under 35: Evan Spiegel”)

Keep Reading

Most Popular

mouse engineered to grow human hair
mouse engineered to grow human hair

Going bald? Lab-grown hair cells could be on the way

These biotech companies are reprogramming cells to treat baldness, but it’s still early days.

tonga eruption
tonga eruption

Tonga’s volcano blast cut it off from the world. Here’s what it will take to get it reconnected.

The world is anxiously awaiting news from the island—but on top of the physical destruction, the eruption has disconnected it from the internet.

conceptual illustration showing various women's faces being scanned
conceptual illustration showing various women's faces being scanned

A horrifying new AI app swaps women into porn videos with a click

Deepfake researchers have long feared the day this would arrive.

seeing is believing concept
seeing is believing concept

Our brains exist in a state of “controlled hallucination”

Three new books lay bare the weirdness of how our brains process the world around us.

Stay connected

Illustration by Rose WongIllustration by Rose Wong

Get the latest updates from
MIT Technology Review

Discover special offers, top stories, upcoming events, and more.

Thank you for submitting your email!

Explore more newsletters

It looks like something went wrong.

We’re having trouble saving your preferences. Try refreshing this page and updating them one more time. If you continue to get this message, reach out to us at with a list of newsletters you’d like to receive.