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How will Snapchat’s upcoming IPO impact its assets, liabilities, and equity?

How will Snapchat’s upcoming IPO impact its assets, liabilities, and equity?

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Answer #1

The upcoming IPO will have a positive impact on Snapchat’s assets and equity. In the upcoming IPO Snapchat will issue common stock class A shares and the IPO is valuing the company at $25 billion.

IPO of Snapchat will entail issuing of shares for cash and this will increase the cash and bank balances of the company. An increase in the cash and bank balances will lead to an increase in current assets of Snapchat and hence its overall assets will also increase. On the other hand the company’s stockholder’s equity will also increase as new common stock is sold to the public through the IPO.

The IPO will have negligible impact on liabilities of Snapchat.

Thus the IPO will lead a significant increase in Snapchat’s assets and equity with negligible or no changes with regards to its liabilities.

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