The Snap IPO has seen significant press over the last year, in part due to the lack of recent tech IPOs, but mainly due to the similarities (or lack of) to Facebook at the time of its flotation. There are some very positive aspects to the business that put it on a par with Facebook, such as the user engagement statistics, the strong revenue growth, an innovative and in-touch leader, and a unique and interactive ad product.
However, what Facebook did not have at the time of its IPO was a competitor called Facebook. Snap has seen its stories feature successfully copied by Instagram, its direct competitor within its target demographic. The growth rate at Snap has subsequently fallen to a mere 3.2% in Q4 2016. Snap also suffers from being a bit of a one-trick pony, with the diversification into "cameras" considered a bit of a sideshow.
Ultimately, the IPO looks like it will go ahead at a valuation similar to the most recent financing round – a successful IPO, and the positive publicity that goes with it, will be considered more important than the extra funds raised. Only time will tell if this is a fair valuation, with significant growth (and profitability!) still factored in at the $18.5bn valuation touted.
A lot of people are going to draw similarities between Snap’s upcoming IPO next month and the Facebook IPO. As the last major ad-driven social IPO — and one of the biggest — Snap is going to be compared to Facebook’s business. Snap has huge costs of revenue, though its business is very young. And to make things more direct, Facebook is increasingly copying its tactics and products in order to head off Snap potentially locking in an audience that would otherwise grow into using Facebook.