Growth worries cloud Snapchat’s $25bn float move

SNAPCHAT’S blockbuster $25 billion (£19.8 billion) stock market listing faces a backlash because of rising scepticism about the popular social media app’s ownership structure and slowing growth.

The camera phone app, which last night filed for its hotly anticipated stock market float through parent Snap, revealed flagging user growth last quarter, fuelling fears the photo-sharing site will run out of steam.

Snap shares will also carry zero voting rights, a first for a listing of this size, giving co-founders Evan Spiegel (pictured) and Bobby Murphy complete control of the group even if they are fired.

Snap revealed it has 158 million users worldwide, including 10 million in the UK, but quarterly growth for the three months ending December slowed to 3%. Each user made the group $1.05 each last quarter, up from 31 cents last year.

Losses widened to $515 million last year from $373 million in 2014 while the company also warned it “may never achieve profitability”.

“This is a company that perhaps has reached its peak and that could never have been said about the Facebooks and the Googles, which were clearly growing at a huge rate when they did their IPOs and one invested in the fact that they were going to continue that growth,” said TechMarketView’s Richard Holway, a leading UK tech analyst.

The listing, which will initially raise up to $4 billion of fresh cash, is the largest since Alibaba floated on the New York stock market in 2014 and the biggest US tech float since Facebook came to market in 2012.

Big US banks Goldman Sachs, JPMorgan, Morgan Stanley and Allen & Company are masterminding the float alongside European lenders Barclays, Credit Suisse and Deutsche Bank. Like Facebook, Snap’s float will make its founders instant paper billionaires. Spiegel, the 26-year-old co-founder who is engaged to model Miranda Kerr, will become the world’s youngest billionaire with his stake worth up to $5.5 billion. Murphy will be worth a similar amount. Early investors in the Los Angeles-based outfit, including Benchmark Capital, will also win big, with stakes worth billions.

The Council of Institutional Investors, an association of big US pension funds, is due to issue a letter of objection to Snap’s ownership structure today, the FT reported, heaping pressure on the group. Critics predicted pain. Richard Windsor, a former Nomura analyst who works at Edison, said: “$25 billion is at least 32% too much to pay for investors who will also have no say.”

Snap opened a European office, based in London, in January.