London: Snap Inc, owner of popular messaging app Snapchat, kicked off its first investor roadshow yesterday, looking to persuade London money managers to back its initial public offering in the face of concerns about its growth prospects, valuation and corporate governance.
The US company, which has yet to make a profit, is targeting a valuation of between $19.5bn and $22.3bn from listing on the New York Stock Exchange, after cutting its initial target of $20-$25bn last week following investor feedback.
Investors attending Monday’s event said Snap’s 26-year-old Chief Executive Evan Spiegel gave a sleek presentation. However, they were disappointed there were no projections on the company’s future revenues or advertising share - an indication of how quickly Snap thinks it can make money from its huge user base.
“That’s the million dollar question and we won’t find out for some time,” said one potential backer on his way out from the hour-long event where Spiegel ditched his usual casual wear and wore a suit with no tie.
Some were disappointed that it was just a question-and-answer session with no demonstration of Snapchat’s spectacles, launched in the United States late last year, which come with a built-in camera.
One attendee, however, said it made sense not to push the hardware angle too much at this stage.
Few US firms aside from Apple have made big profits on hardware, and camera and wearable gadget makers have much lower valuations than Snap is seeking.
Most of the questions related to how the company plans to manage its engagement with advertisers and users, and monetise that better, according to people who were in the room.
