Jon Swartz

USA TODAY

SAN FRANCISCO — Don't look now, but the tech IPO market may be about to Snap out of its year-long torpor.

The blockbuster initial public offering is expected to kick off a revitalized market this year, encouraging IPO debuts by other unicorns, the privately held start-ups whose hefty venture capital funds have allowed them to avoid Wall Street and the legal requirements of a public offering.

Snap, the Venice, Calif.-based parent of the youth-oriented Snapchat messaging app, plans to offer 200 million shares at $14 to $16 apiece, giving it a value of $19.5 billion to $22.2 billion, according to a filing Thursday.

Even though that's lighter than private estimates of its worth — some company executives had eyed $20 billion to even $40 billion — Snap's market entrance would still be huge. The sale, which aims to raise about $3 billion, is in the running to be the third-largest tech IPO in the last decade, dwarfed only by Alibaba Group Holding Ltd. ($25 billion share sale, for a valuation of $169.4 billion) and Facebook ($16 billion share sale for a value of $81.2 billion), according to market researcher Dealogic.

"Snap will be a jolt to the tech IPO market," says Angelo Zino, an analyst at CFRA Research.

Macroeconomic and geopolitical turmoil that roiled markets last year are expected to yield to an exuberant market trading at record highs and a stream of high-profile companies in the IPO pipeline in 2017. Among the possible candidates: Hootsuite, Dropbox and Spotify. The companies declined comment.

Applications-management company AppDynamics was acquired by Cisco Systems for $3.7 billion days before its scheduled IPO in late January.

Snap or no Snap, the tech IPO market is poised for a comeback in 2017 after a desultory 2016 — the worst worldwide this decade. Last year, only 53 tech companies raised $8.7 billion in initial public offerings, down 42% and 68%, respectively, from 2015, according to PricewaterhouseCoopers.

"The big question is: Will Snap have Facebook-like growth trajectory after its IPO or Twitter-like growth?" says Minal Hasan, general partner and founder of K2 Global, a venture-capital firm in Silicon Valley. "In fact, Facebook continues to be a thorn in Snapchat's side."

Facebook raised the competitive ante last month, with the introduction of a Snap-like service called Instagram Stories, she says.

And there are nagging financial doubts about Snap for potential investors, based on information from its S-1 filing to go public.

Snap generated $404.5 million in revenue last year, compared with $58.7 million in 2015. It is on pace to clear $1 billion in 2017. But it lost $514.6 million last year and $372.9 million in 2015. Meanwhile, its count of daily active users, at 158 million, is relatively flat from the previous two quarters.

"Snap is a unicorn IPO and a unicorn company," says Chamath Palihapitiya, founder and CEO of Social Capital, a Silicon Valley venture capital firm that backs companies in areas such as healthcare and education. "It's ramping engagement but not necessarily ramping a foreseeable growth pattern on top of a vanilla IPO."

An alarming concern is the vise-like voting power of co-founders Evan Spiegel and Bobby Murphy, who will own 89% of voting shares post-IPO, leaving other shareholders with no voting rights.

Despite potential downsides, Snap will shine a bright light on tech IPOs, especially prospects for unicorns, says Kevin Spain, general partner at Emergence Capital. "Public markets have a real appetite, especially enterprise companies" like Hootsuite and Dropbox, he says. "Hopefully, this is a harbinger of good things to come."

Trump's pro-business stance in reducing regulation could lead to a streamlined IPO process, encouraging more start-ups to take the plunge, says Duncan Logan, CEO of RocketSpace, a tech campus for high-growth companies in San Francisco whose alumni include 18 unicorns such as Uber and Spotify.

The telling sign, says one tech exec who just went public, is long-term financial viability.

"No matter when you list, what matters is whether you have high growth," says Axel Hefer, chief financial officer at Trivago, a hotel-search website that debuted in December 2016 at $11.20 per share. It closed up 2%, at $13.84, on Friday.

"An IPO is an entry, a starting point to telling your story," Hefer says. "We were not focused on timing, but getting it done."

MORE:

Snap IPO is a test for its millennial users: will they bite?

Snapchat parent files for $3 billion IPO

Your complete guide to the Snap IPO

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