Snapchat – should you invest?

You can’t possibly ignore Snapchat. It’s one of the biggest tech IPOs since Facebook. This is a notoriously difficult kind of business to judge. It relies, to a large extent, on fad and fashion – as well as more predictable factors, like product quality. As it’s your very first opportunity to get involved, I’m sure you’ll be interested to know how Snapchat’s predicted $25 billion IPO will play out.

Let’s take a quick look at the basics.

An initial public offering (IPO) is when the shares of a company are first sold to the general public. This gives a clear, publicly defined and agreed price – fixing the value of stock in a firm, for the first time.

For those who aren’t familiar with the brand, Snap is the company that owns the Snapchat social network. Despite its impressive predicted market capitalisation, this firm may have escaped your attention. Although it’s a very large social network, it’s not one that many adults in the UK make regular use of. Snapchat’s principal demographic is a younger audience. It’s predominantly concentrated in the US, and it is particularly popular with female users. I’ve fiddled with it occasionally – but hardly anyone I know is on it, which rather limits the appeal.

What’s the big deal with Snapchat?