Lex in Depth: Can Snap Survive?
As pressure from Facebook intensifies, the group has three years to make a profit before it will need to raise fresh funds
By Elaine Moore
In the spring of 2017, global markets crowned Evan Spiegel the new boy king of tech. At just 26, Mr Spiegel took his Los Angeles based photo message and camera company Snap public for $24bn, making it the biggest IPO in years. The lossmaking company was valued more highly than Facebook, with a market capitalisation nearly 60 times bigger than sales. By the end of the year, stock-based awards made Mr Spiegel the highest-paid chief executive in the US.
Two years on, Snap has suffered an executive exodus including two chief financial officers, the chief strategy officer and the head of human resources. After a disastrous redesign, user numbers have stopped growing. Shares now trade 30 per cent below the listing price.
The social media network has gone from scrappy start-up to multibillion-dollar public stock to plotting its own recovery in the space of just eight years. The compressed timeline illustrates the late stage of Silicon Valley’s current investment cycle.
This year is expected to set a record for tech IPOs from the likes of Lyft to Pinterest, Slack and Uber in…
