Snapchat's parent set a valuation that was less than Wall Street had targeted. As Fred Katayama reports, investors are concerned by its growing losses and heightened competition with Facebook.
Snapchat's parent may not be worth as much as some on Wall Street had hoped for. Snap now values itself at up to $18.5 billion in its IPO. That's less than the $20 to $25 billion that investors had targeted for the company behind the popular app that sends disappearing messages. University of Florida finance professor Jay Ritter said, "I think that the lower proposed valuation reflects feedback from institutional investors that the higher valuation is hard to justify. The concerns are about Snap, not the IPO market." Snap is the year's most anticipated IPO, and it expects to raise as much as $3.2 billion from the offering. But what concerns investors are its growing losses, firm control of its founders, and intense competition from Facebook. Facebook's image messaging app, Instagram, recently introduced disappearing video content and, like Snapchat, sells ads on its platform. Snap has rebranded itself as a camera company and has started selling video camera glasses. The company is set to list on the New York Stock Exchange under the ticker symbol, SNAP.