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A snap banner on the NYSE building Reuters

Snap Inc, the parent company of messaging app Snapchat, filed an initial public offering with the Securities and Exchange Commission on 2 February (Thursday). The company's shares will be traded on the New York Stock Exchange (NYSE) with the ticker "SNAP" and it aims to raise $3bn (£2.4bn) through its IPO.

IBTimes UK brings all the necessary information about the company and its big debut on Wall Street that you need know:

What is Snapchat?

Snap's main product Snapchat is a social media app through which users send and view "snaps" that last only for a while. The company makes money from ads on this platform and content created by third-party channels such as news organisations and content creators.

Other than the app the company has introduced an augmented reality glasses called Snapchat Specs, which recently got payment feature called Snapcash. However, the Bluetooth video-taking glasses have failed to do much for the company's revenues and in its filings the company said, "We have limited manufacturing experience."

What are the main financials involved?

Snap could be valued anywhere around $20bn to $25bn, according to sources close to the matter although its last private market valuation stood close to $18bn. If it nears the $25bn mark it would give the company the richest valuation in a US technology IPO since Facebook Inc.

The majority of Snap's revenue in 2016, 98%, came from advertising and although it is growing its losses are also increasing by the day. Net losses grew to $514.6m in 2016, compared with a net loss of $372.9 million in 2015.

Snap's biggest losses stems from "hosting fees" which it pays to cloud computing companies such as Google to use their infrastructure for its data. It is expected to pay Google over $2bn the next five years to use its cloud computing services.

What are the current user engagement numbers like?

As of December 31, 2016, Snapchat has 161 million daily active users who spend around 25 to 30 minutes a day in its app. More than 2.5 billion snaps are created every day and users visit Snapchat more than 18 times a day on an average.

The app's user base grew by 50 million daily active users in 2016, but growth slowed considerably at the tail end of the year as it managed to garner only 5 million users in Q4 2016. Snap blamed the slower daily active user rate in the second half on a number of factors but mainly to the failure to introduce product updates in mid-2016 which may have led to performance issues.

Snapchat and its competition

Instagram, the Facebook-owned social network that spans over 400 million users, is Snapchat's biggest threat right now. Instagram's recent launch of Instagram Stories directly takes on Snapchat Stories feature.

"Our business is highly competitive," the company said in its filing. "We face significant competition that we anticipate will continue to intensify."

Like Twitter, Snap is facing the same problem of losing out on users and failing to tap new users. However, Snap has started to figure out how to generate meaningful revenue from its users.

Talking about Facebook, the platform is an unfair comparison to Snapchat given the former has a lot more to offer than just snap features. Right now Facebook has the highest user base, almost nearing the 2 billion mark for monthly users. Also Snapchat is only about five years old as against Facebook, which has been in the market since 2004.