Everything You Wanted to Know About Snapchat’s IPO (But Were Too Afraid to Ask)

Snapchat IPO

(Update: We updated the company’s initial worth and share values, while also adding in questions from this article about when and how to buy $SNAP.)

Snapchat, one of the most popular social media apps not owned Facebook or Twitter, is going public. According to Forbes and other industry experts, you will be able to purchase shares of Snap Inc. under $SNAP on the New York Stock Exchange sometime this week. If you think Snapchat is a product that will grow over time and continue to attract customers, you’ll soon be able to invest directly in their product.

Yet Snapchat selling stock has its positives and negatives, just like every company that decides to go public. Right now, the company has more users than Twitter, but user signups are slowing down. They’re raking in millions, but they’re losing more money each year. Snapchat’s features are unique, but other services like Instagram are rebuilding them for their users.

That’s why the Los Angeles-based company is raising billions of dollars during their initial public offering (or IPO). They aim to become more than just a video-based social app and diversify their business offerings. They also want to grow their business to the point where they stop losing money.

The question is: can they do it? More importantly, what obstacles do they have to overcome before they’re in the black. Better yet, should you invest in the company while they’re still not profitable? We’ve got all the answers to these questions and everything else you want to know about this blockbuster IPO.

What is an IPO?

An initial public offering (or IPO) is when a company stops being a privately held company and becomes a publicly traded company. Anyone with the right amount of money can buy a share or shares of that company’s stock and own a part of that company.

Why is Snapchat going public and selling stock?

When Snap Inc. (Snapchat’s parent company) sells a percentage of their stock, they’ll get money for those share in return. This money will help fund things like hiring more staff, spending more on research and development, and generally growing their business. The idea is that when they’re able to do this, it will help them move towards profitability by creating a better, more successful product.

When is Snapchat going public?

$SNAP will go public on Thursday, March 2nd. You can’t, however, buy stock as soon as the market opens. You’ll have to wait until a bit later in the day when it becomes priced after preferred investors (those who helped Snap Inc. go public) buy the shares. These investment firms underwrote the IPO, which allows them and their customers to buy Snap Inc.’s stock before anyone else can.

What will Snap Inc. be valued at and how much will they make by going public?

Snap Inc. will initially be priced at $17 a share. This will value the company at $24 billion. The company will gain $3.4 billion just by selling their shares at these prices and values.

How much money is Snap Inc. losing?

The company posted a net loss of $514.6 million last year. This is after taking in revenue (mostly from ads) of $404.5 million. The company is far from profitable.

What is holding the company back?

Snap Inc. is currently losing money, though they make hundreds of millions in revenue. They’re also facing a slowdown in user signups, which the company attributes to people using old, cheap phones. If the company is able to increase advertisements on their service and lure more advertisers, then they’ll make more money. If they’re able to make older Android phones compatible with their app, then they’ll bring in more users. There’s several other things they can do, like add new sources of revenues from new businesses, but they need to raise money from the IPO first to do that.

How can I buy $SNAP?

Once $SNAP is priced by its underwriters, it will be traded like any other common stock. You can buy any amount of shares you want through your broker or brokerage (even Robinhood).

When can I buy $SNAP?

If you’re a Goldman Sachs or Morgan Stanley customer, chances are you already put in your order. If you’re just a regular investor  with a brokerage, you will be able to purchase $SNAP later today you can buy $SNAP right now.

How much will $SNAP be when I buy it?

It will be initially valued between $23 and $23.50 $SNAP is currently trading at $24.84 as of this writing. It will likely be more than $17 a share. The stock’s opening price, however, is determined later in the day, though it certainly will remain in the double digits. If you want to buy it around $17, however, you’ll have to wait for it to go back down to that level (if it ever does) over time.

Should I buy $SNAP?

The company is losing money and has yet to turn a profit. If it can lose less money over time, then it might have what it takes to turn a profit. If it continues to lose money and users (as fewer and fewer people are signing up for Snapchat), then it could go the way of Twitter.

If you think $SNAP will become profitable and avoid Twitter’s mistakes, do your research before you decide to invest in the stock. If you would rather see how the company performs over time, you might want to wait.