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Pro Analysis

Breakingviews: Snap IPO draft sounds more like GoPro’s than Facebook's

Pedestrians hold umbrellas while walking past a Snapchat sign displayed outside of the New York Stock Exchange.
Michael Nagle | Bloomberg | Getty Images
Pedestrians hold umbrellas while walking past a Snapchat sign displayed outside of the New York Stock Exchange.

The parent of the Snapchat smartphone app thinks it's "a camera company." It's almost as if its initial public offering filing on Thursday – which may raise up to $3 billion and see the company valued at up to $25 billion – was somehow confused with GoPro's from a few years ago, when the camera-hardware maker said it was in the media business.

The purveyor of disappearing messages has some big things going for it that GoPro didn't have. Social-network services have a tendency to be winner-take-all propositions, and Snapchat is one of the winners. It is growing exponentially, too: revenue, at just over $400 million in 2016, was nearly seven times as big as in 2015.

That kind of statistic helps justify huge technology-sector valuations. There's plenty of room for growth in revenue per user, if Snap gets it right. At just over $1 per user per quarter, that's in the same ballpark as Facebook when it went public in 2012, and Mark Zuckerberg's $385 billion giant has pushed that up to nearly $5 in the most recent quarter.