LOS ANGELES _ Snapchat app maker Snap Inc. filed papers Thursday to move forward with what's expected to be the biggest initial public offering ever for a Los Angeles company and one of the highest valued in U.S. history.
Conceived six years ago by Stanford University fraternity brothers to help peers send photos that would vanish after they were viewed, Snapchat roared through high schools and colleges. When the app hit 40,000 users in months, its co-founders knew they held a treasure.
Snapchat has become a force in technology, advertising and entertainment. The company _ which rebuffed a multibillion-dollar acquisition offer from Facebook _ has popularized vertically oriented videos, pioneered interactive smartphone ads and become a hot way for media to reach teenagers.
Now, Snap shares could begin publicly trading on a Wall Street stock exchange within weeks, giving investors a chance to bet Snap is just getting started.
An IPO represents a major financial and symbolic milestone for a young company, giving it a large amount of cash to expand, a bolstered reputation in the business community and greater responsibility to disclose business results. Employees also may begin cashing out stock grants earned as part of their compensation. Snap's IPO could turn hundreds of its workers into millionaires this year.
The company's more than 1,800 employees work on several products and services, including Snapchat, among the most-downloaded social media apps not owned by Facebook. Tech watchers initially denounced the disappearing photo messaging app as a sexting tool that couldn't possibly mature into a business as it caught on among high schoolers. Since then, a raft of new features has evolved Snapchat into a coveted space for distributing ads and videos to millennials and Generation Z behind them.
In the Securities and Exchange Commission filing, Snap publicized its finances for the first time. The company said it has $150 million in cash in the bank and $837 million in bonds and other marketable securities. It generated $404.5 million in revenue in 2016, mostly from selling ads that appear in Snapchat. But $924 million in spending on hosting costs, revenue-sharing agreements with content partners, research and development and other costs left Snap with a $514.6-million loss. In 2015, when its advertising efforts were just getting started, the company had $58.7 million in sales and a $372.9 million loss.
