Snap's Pitch To Investors: We're More Like Apple And Facebook, Less Like Twitter

Snap Inc., the parent company of the social media platform Snapchat, will see its stock trade on a public exchange for the first time next year.

The company's pitch to investors appears to be easy enough: Snap is one part Apple Inc. AAPL, one part Facebook Inc FB and zero parts Twitter Inc TWTR. Snap's bankers and advisers will be pitching Snap's 26-year-old founder Evan Spiegel as one part Mark Zuckerberg, one part Steve Jobs and zero parts Jack Dorsey.

What Spiegel Needs To Do

However, this alone won't win over the investment community. According to the Wall Street Journal, Spiegel needs to communicate his vision to investors that his platform will continue growing in popularity, especially among the coveted millennial demographic.

Moreover, Spiegel needs to focus on the "stickiness" of the platform, or time spent by users, which is a key consideration among advertisers. As if this wasn't enough, Spiegel also needs to justify the company's valuation which is pegged as high as $25 billion.

Expectations

Dan Morgan is a senior portfolio manager with Synovus Trust and oversees around $12 billion in assets. He told the Wall Street Journal that Snap is expected to generate around $940 million in advertising revenue next year and a $25 billion valuation gives it a multiple of 26.7-times ad sales.

By comparison, Facebook is trading at 19.4-times and 13-times their respective advertising revenue.

"I'm probably going to be cautious going into the IPO," Morgan told the Wall Street Journal. "We do own Facebook and Google, so the question is, ‘Is there a place at the table for Snap, or is it going to go the way of Twitter?' Because we don't want that."