NEW YORK (TheStreet) --The parent company of popular social media app Snapchat, Snap Inc., has confidentially filed for an initial public offering, according to a Bloomberg report citing confidential sources. A business valued at less than $1 billion can file in secret to test investor enthusiasm.

The company is seeking to raise $4 billion from the offering, placing its valuation between $20 billion and $25 billion.

"Talking about numbers, we're talking about the multiples against that valuation, they're going to hit $350 million to $400 million in revenue this year, our sources tell us," Recode managing editor Ed Lee said on CNBC's "Closing Bell" today.

Looking forward, next year Snap is projected to hit the one-billion-dollar mark in revenue. 

"They're still growing, they're still a young company and I think that's a part of the calculus as well in terms of, this is this is probably the time to go to the public market and get that investment," Lee noted.

That said, Lee did raise some concerns regarding the company's push for an IPO reportedly targeting March of next year.

"When Facebook (FB) went public, the year before it generated about $3.5 billion to $3.7 billion in sales. They were a much more mature company when they hit the public markets. So, I think that's what makes [Snapchat's] entry a little bit unusual," he explained.

Another question mark is advertising. Up until this month, Snap did not have a regular ad product; all the sales were made "sort of manually ordered," Lee noted.

"They just released their ad product a month ago, which allows them to sell ads on an automated basis. That will give them the scale. The concern, however, if you see more ads it might scare users away," Lee said.

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