Is Snapchat preparing for an I.P.O.?

When Snapchat turned down Facebook’s$3 billion acquisitionoffer in 2013, the tech world balked. Since then, the five-year-old social-media platform has continually proved its critics wrong. Much like its reformed frat-boy founder,Evan Spiegel, Snapchat is growing up, and rapidly. With 150 milliondaily active users, Snapchat is more popular than Twitter and is arguablythe favoredsocial-media app among teens. Now the ephemeral messaging company is leveraging its burgeoning audience in favor of its bottom line with the launch of Snapchat Partners, a much-anticipated A.P.I. that is fueling rumors that Snapchat could be preparing to go public—and soon.

On Monday, Snapchat announced a massive expansion of its advertising business, which will expand its advertising offerings and allow third parties to sell ads for the first time on its platform,Adweekreportsin a major deep-dive into the company. The long-awaited A.P.I. is extensive, but its most interesting aspect might be the man behind it,Imran Khan. A former investment banker at Credit Suisse, Khan’s 2014 appointment as chief strategy officer at Snapchat sparkedspeculationthat the young company was eyeing an I.P.O. After guiding Chinese e-commerce giant Alibaba through its record-breaking I.P.O., Khan seemed like the perfect hire to introduce the social-media company to the public market. In an interview with Khan,Adweekbroachedthe topic, but Khan reportedly sidestepped any I.P.O. speculation and characterized going public as a “financing event.” He added, “I think advertising is a very large opportunity, and we’re just getting started,”Adweekreports.

The new advertising A.P.I. will be an integral part of whether or not Snapchat hits its aggressive revenue goals. According to leaked documentspublishedlast month by TechCrunch, Snapchat raked in $59 million in revenue in 2015, but aims to earn between $250 million and $350 million this year. By 2017, the social-media platform projects its revenue to be between $500 million and $1 billion. Under Khan, Snapchat introduced sponsored lenses last year, whichreportedlycost advertisers as much as $750,000 per day. The start-up has sinceintroduced“Live Story” advertisements, which cost in the ballpark of $250,000, and the opportunity to take over publishers’ channels on Snapchat Discover for $50,000.

It would make sense that Khan, whomAdweekcomparestoSheryl Sandbergat Facebook, is getting the company revenue-ready ahead of an I.P.O., but it seems that Spiegel and friends want to have a reliable revenue model in place prior to hitting the public market (unlike its embattled competitor Twitter). With buzz of an impending tech-bubble burst and fresh off a staggering $1.8 billionfunding roundthat put its post-money valuation at anywhere from flat ($16 billion) to $20 billion, waiting to solidify its fundamentals doesn’t seem like such a bad idea.

(VANITY FAIR)