Anthony Pompliano submitted a lawsuit last Wednesday in a Los Angeles County court. He accused Snapchat of misleading investors according to Biz Journals.
“Snapchat will not let anything stand in its way of an IPO, including its obligations to represent material facts accurately,” the suit reads. According to the complaint, Pompliano worked for Snapchat for about three weeks before being terminated. He claims that his refusal to participate in said misrepresentations led to his termination.
“The thing founders need more than anything is just someone who understands where they are,” Pompliano said in an August interview about the venture. “They want someone who can communicate with them in a way that helps remove all the bull and drill down to the things that matter.”
The social media firm plans to make its initial public offering soon. Apparently, the company played down the accusations.
“We’ve reviewed the complaint,” Snapchat’s parent company, Snap Inc. spokeswoman Mary Ritti said in a statement. “It has no merit. It is totally made up by a disgruntled former employee.”
The social media platform plans to raise at least $4 billion. The IPO could value Snapchat’s parent company, Snap, Inc., at $25 billion to $35 billion. These amounts top its $20 billion value in early 2016. Some expect the figure to rise to $40 billion.
Sales rang in at $250 – $350 million last year. $1 billion revenue is expected in 2017. The company changed its name to Snap, Inc in September. The name reflects a new focus.
This focus includs products. For instance, the company released sunglasses with a video camera installed. The sunglasses record 10-second video clips. The clips sync to the user’s device. From there the media is shared via Snapchat. The sunglasses, called Specatacles, cost $129.99. The product comes in several colors.
Clearly, Snapchat desires to become a media company. Snapchat’s co-founder and CEO, Evan Spiegel, said so himself. Spiegel sees his company as in the camera business. In addition, he compared Snapchat to Kodak.
Yet the company’s story goes beyond legendary comparisons.
An Almost Irresistible Offer for Snapchat
Facebook offered to buy Snapchat for $3 billion in 2013. But Spiegel turned down the offer. He wanted much more for the company.
And he got it.
Soon after Alibaba invested $200 million. Then more companies contributed. Even financials like T. Rowe Price and Fidelity. Then the company began to detail how it planned to generate revenue. The investment train gained steam after that.
Furthermore, Spiegel’s action was a strategic move. The act was personal too. In an interview with Forbes, Spiegel said:
“There are very few people in the world who get to build a business like this. I think trading that for some short-term gain isn’t very interesting.”
The company started in 2011 as an app to share short videos and photos. Both disappear after a recipient looks at them. The app was a response to people’s concerns about today’s permanent presence on the internet. Nowadays the app contains a media hub. Users can view news story tidbits from renown publishers.
Source: Biz Journals