Goldman Sachs, one of the lead banks on Snap’s initial public offering, estimates that revenues for the social-media company could hit nearly $2 billion in 2018. That’s nearly five times last year’s sales.
The information was relayed to Business Insider by somebody who had been briefed on the bank’s research estimates. The figures are being cited by Goldman’s sales force when speaking with prospective investors, the person said. Snap is on the road this week meeting investors and a key question is how much the company, whose Snapchat app is known for its disappearing photos, can grow its user base. Goldman estimates that the company could grow its daily average users to 221 million in 2018, up from 158 million late last year, the person said.
The IPO is expected to be one of the biggest in tech in years, with Snap valuing itself up to $22 billion and seeking to raise as much as $3.2 billion. That increase, of about 40% over two years, would mark a further slowdown in the addition of new users. In the fourth quarter of 2016, for example, Snap says it had 48% more users than a year earlier. That’s the slowest growth rate for any of the 12 quarters for which it reported numbers.
Goldman is among the banks selling the deal to investors, so its numbers need to be viewed with that in mind. Still, the $2 billion revenue target lines up with other analysts – including James Cordwell from Atlantic Equities who issued a “neutral” rating on the stock.
Here are Goldman’s side-by-side comparisons:
- 2016 revenues: $404 million 2018 revenues (projected): $1.959 billion 2016 daily average users: 158 million 2018 daily average users (projected): 221 million
Snap hit the road last week in its official tour with prospective investors for its initial public stock offering and plans to offer shares on March 1.
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