The parent company of Snapchat (Snap Inc.) is going public next week in one of the most closely watched tech IPOs since Twitter went public in 2013. The ephemeral messaging service that officially describes itself as a “camera company” is pulling for a market valuation of about $22 billion.The potential trouble for Snap is that its most tangible source of revenue — automated ads — will have to siphon ad dollars from Google and Facebook, two companies that effectively enjoy a duopoly on the digital advertising market. Investors are particularly worried about Facebook, which has introduced competing features on WhatsApp and Instagram that could further stall Snapchat’s already slowing user growth.Snap’s corporate leadership has been meeting with investors around the country as part of what’s billed as an “IPO road show” in order to allay concerns. Based on various news reports this week, the process seems to be pretty rocky.For one thing, with less than two weeks to go before the public offering, top Snap ad executive (and therefore one of its key business leaders) and Facebook alum Sriram Krishnan announced he is leaving the company. Business Insider, which spoke with investors at Snap’s New York road-show stop, reports that a number of those present felt they didn’t get straight answers from Snap’s executives during the “respectful but somewhat skeptical” meeting.Their grievances are said to include two big things:
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- That Snap failed to give a real justification for why shares in the company won’t have any voting rights (which is highly unusual)
- Lingering doubt about Snap’s ability to grow its user base substantially in the long run, as Snap user growth has slowed significantly in recent quarters.