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2017-02-16 10:43:09
Snap Aims for Valuation of More Than $20 Billion in I.P.O.

SAN FRANCISCO — The parent company of Snapchat is preparing to hit the road to pitch potential investors.

Snap Inc., as the messaging start-up is formally known, disclosed on Thursday that it was seeking to raise more than $2 billion in its initial public offering.

In a newly revised prospectus filed with the Securities and Exchange Commission, the company said it expected to price its offering at a range of $14 to $16 a share.

At the midpoint of that range, the company would be valued at nearly $20.9 billion. At the high point of the range, Snap would be valued at $22.24 billion.

As of last year, the company valued itself at about $16.5 billion.

At this stage of the I.P.O. process, Twitter was valued at more than $12 billion, including options and restricted stock units, in October 2013. A year earlier, Facebook was valued at $86 billion at a similar stage.

Snap’s filing highlights its ambitions for its public market debut. The company, built on disappearing messages, will hold what is the biggest and most anticipated I.P.O. in years. Its shares would trade on the New York Stock Exchange under the ticker symbol SNAP.

The filing precedes the final stage of the I.P.O. process: meeting first with the sales teams at Snap’s underwriters, and then, starting next week, with potential investors around the nation to pitch them on the offering.

The message that Snap is selling is relatively simple. The company has quickly become one of the technology world’s brightest stars, and its offering stands out in a largely barren landscape for new stocks.

But potential investors are likely to question whether Snap can maintain an enviable user growth rate, particularly as Facebook has unabashedly copied many of the service’s top features within Instagram.

And those prospective investors may also question how long Snap will take to reap profits. The company has disclosed that it lost $514 million last year, widening from $373 million in 2015. Revenue grew by about seven times over the course of 12 months, to $404.5 million last year from $58.7 million in 2015.

Begun in a Stanford dorm room six years ago, Snapchat has grown from a trendy redoubt for millennials into a top destination for both general users and advertisers. It started life as a way for people to send self-destructing photo messages to friends, but it has since added more ambitious tools to let users compile “stories” about their days and special filters that let people transform their faces into dogs, fairies or paid-for content like Taco Bell tacos.

Snap is expected to produce huge wealth — at least on paper — for its existing investors, notably the founders Evan Spiegel and Robert Murphy, who each own 227 million shares that were valued at $3.7 billion last year.

At the midpoint of Thursday’s price range, each man’s holdings will be worth $3.4 billion.