Snap has priced its IPO at the lower end of its expectations.
Snapchat's parent company Snap Inc. is seeking to price its IPO at $14 to $16 per share, setting its valuation below initial expectations, according to documents filed with the SEC on Thursday.
The regulatory filing confirms Snap is looking to sell 200 million Class A shares, which it estimates will generate between $2.1 billion and $2.3 billion.
The filing confirms earlier reports from The Wall Street Journal and The Financial Times that the company has set a valuation for itself of between $19.5 billion and $22.2 billion.
Snap had initially sought a valuation of $25 billion, according to the initial listing document it filed earlier this month.
The company will list on the New York Stock Exchange, under the "SNAP" ticker.
Morgan Stanley is the lead bank working on the share sale. The other banks participating are Goldman Sachs, Barclays, Credit Suisse, JP Morgan, Allen & Company, and Deutsche Bank.
Snap has not yet set a date for its IPO, but sources have previously told Business Insider that the company plans to go public in March.
Snap, which made its fame with an app that sends ephemeral photo and video messages, describes itself as a "camera company".
The Snapchat app had 158 million average daily active users as of the fourth quarter of 2016. It makes the majority its money through advertising and booked revenue of $404.4 million last year, up from just $58.6 million in 2015. Last year the company introduced its first hardware product, camera glasses called Spectacles that retail at $130.
Snap says it plans to use the IPO funding for "general corporate purposes, including working capital, operating expenses, and capital expenditures."
The company adds that while it might purchase some "complementary businesses, products, services, or technologies," it is not anticipating any material acquisitions.
The Class A stock being offered carries no voting rights. Holders of Class B stock are entitled to one vote and it is convertible into one share of Class A stock. Holders of Class C stock — restricted to the company's founders, CEO Evan Spiegel and CTO Bobby Murphy — are entitled to ten votes. The Class C stock represents 88.5% of the voting power of the outstanding capital stock after the IPO.
"As a result, Mr. Spiegel and Mr. Murphy, and potentially either one of them alone, have the ability to control the outcome of all matters submitted to our stockholders for approval, including the election, removal, and replacement of directors and any merger, consolidation, or sale of all or substantially all of our assets. If Mr. Spiegel’s or Mr. Murphy’s employment with us is terminated, they will continue to have the ability to exercise the same," the regulatory filing reads.
It marks the first US IPO to issue shares with no voting rights — something that prompted several of the largest US pension funds to send a letter of objection to Snap earlier this month, The Financial Times reported.
More to follow ...
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