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Reuters
LONDON
Snap Inc, owner of popular messaging app Snapchat, kicked off its first investor roadshow on Monday, looking to persuade London money managers to back its initial public offering in the face of concerns about its growth prospects, valuation and corporate governance.
The U.S. company, which has yet to make a profit, is targeting a valuation of between $19.5 billion and $22.3 billion from listing on the New York Stock Exchange, after cutting its initial target of $20 billion-$25 billion last week following investor feedback.
Investors attending Monday's event said Snap's 26-year-old Chief Executive Evan Spiegel gave a sleek presentation. However, they were disappointed there were no projections on the company's future revenues or advertising share ” an indication of how quickly Snap thinks it can make money from its huge user base.
"That's the million dollar question and we won't find out for some time,"said one potential backer on his way out from the hour-long event where Spiegel ditched his usual casual wear and wore a suit with no tie.
Some were disappointed that it was just a question-and-answer session with no demonstration of Snapchat's spectacles, launched in the United States late last year, which come with a built-in camera.
One attendee, however, said it made sense not to push the hardware angle too much at this stage.
Few U.S. firms aside from Apple have made big profits on hardware, and camera and wearable gadget makers have much lower valuations than Snap is seeking.
Most of the questions related to how the company plans to manage its engagement with advertisers and users, and monetise that better, according to people who were in the room. Its responses won over some potential investors.
"Management did a good show, they were very convincing,"said one attendee.
Los Angeles-based Snap also plans roadshows in New York, Boston and San Francisco. It expects to price its IPO after the U.S. market closes on March 1, according to a confidential document seen by Reuters. Some fund managers have said they will stay away from Snap given its decision to adopt a three class share structure - the first of its kind - that will mean shareholders who buy in through the IPO will not have any voting rights.
Instead Spiegel and his co-founder Bobby Murphy will have the right to 10 votes for every share, and existing investors one vote for each of their shares.
