Here's Why Mobile-Messaging Service Snapchat Merits All the Hype

About four years ago, Facebook made its market debut as an $81.2 billion company.

The listing was massive, shocking technology giants such as Apple and Google parent Alphabet, which didn't start off with such huge premiums.

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Now it looks like it will be Snapchat's turn to blaze a trail of glory.

The messaging application company's popularity is undeniable. If the content is controversial and risqué, Snapchat is the place to be.

Snapchat's immense popularity among young people is driven by a fundamental risk in most social-networking platforms: the inordinate longevity of personal data. By tapping into this trend and booming demographic, Snapchat is poised to be a growth stock standout.

The company has filed for an initial public offering valued at $20 billion to $25 billion to occur as soon as March. 

Facebook Chairman, Chief Executive and Co-Founder Mark Zuckerberg is aware of Snapchat's growing prominence and is already testing a clone version that could replicate the app's key features.

Although details are sketchy, Snapchat's anticipated 2017 revenue of $1 billion looks like it translates to a multiple of 25 times based on the IPO's implicit valuation.

Before Facebook went public, it already had $4 billion in sales and a sales premium of 20 to 25 times.

Since then, Facebook has acquired Instagram and WhatsApp and has been under scrutiny for its data security and privacy management.

That is why Snapchat, which is backed by Alphabet's venture capital arm CapitalG, is gradually becoming a force with which to reckon.

Snapchat's temporary images and videos mean that users can avoid the challenges of emergency de-tagging and Photoshopping unappealing candid shots.

There has also been consistent worries that private data stored in Facebook, Google or any other Internet-based service behemoth can be retrieved at any time.

In fact, it is often argued that several global superpowers have tried to pressure companies into sharing data.

Again, this is Snapchat's ace in the hole, because its photos and videos -- about 10 billion a day -- vanish within seconds. One of the best ways to profit is to invest in small companies with innovative technology that are about to go public, and Snapchat fits the bill.

Snapchat has more than 100 million active users, with about 60% between 13 and 24, an increasing cross-section of existing and future consumers.

Despite being a tech IPO, Snapchat's arrival on the scene should only affect Facebook.

Ecommerce players such as Alibaba, which had a massive IPO as well, shouldn't face any real challenges.

Twitter, primarily billed as a news service app, is already struggling.

Skype, which is owned by Microsoft, isn't really a rival, as it offers a more personal and serious messaging and video-calling platform.

Google Hangouts is a fun and vibrant space but is limited to Google's own ecosystem.

This is exactly why the battle for supremacy for Snapchat will be with Facebook.

Although Facebook has taken quite a while to offer hardware -- Oculus -- Snapchat in September began to position itself a photography-driven enterprise.

Snapchat's $130 video camera sunglasses are an obvious companion for a generation that loves to capture every moment. The tech universe is well aware of Snapchat's enormous potential, with both Facebook and Google have unsuccessfully tried to acquire the app.

When Snapchat goes public, it is poised to do so with a bang.

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The author is an independent contributor who at the time of publication owned none of the stocks mentioned.

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