When Snap Inc. goes on the road next year to market its initial public offering, it will be touting more than its popular virtual-messaging service.
Evan Spiegel, the company’s 26-year-old founder, is expected to figure prominently in conversations with investors during the marketing process, known as a roadshow, according to people familiar with the matter. Snap’s IPO bankers and executives are planning to portray Mr. Spiegel as a visionary who knows how to create products for his coveted millennial peer group, the people said.
The pitch is designed to convince investors that the young company can evolve from a messaging platform into a content and media powerhouse that could one day eclipse its hoped-for $20 billion to $25 billion IPO valuation. The idea is to put the company in a class with Apple Inc. and Facebook Inc., whose shares are up sharply in recent years, while differentiating it from Twitter Inc., which has languished since its 2013 IPO.
Snap also is expected to focus on its “stickiness,” or time spent on its disappearing-message app, and its share of the highly coveted 18-to-34 demographic, according to people familiar with the pitch, which echoes a message the company has delivered to potential investors in meetings that began last month.
But the story isn’t necessarily an easy sell, bankers and investors say. In the expected pricing range, Snap would be valued at a far higher multiple of market capitalization to advertising revenue than other social-media companies, including Facebook and Twitter.
Based on estimates that Snap will generate roughly $940 million in advertising revenue in 2017, a valuation of $25 billion would give Snap a multiple of 26.7-times ad sales, according to Dan Morgan, a senior portfolio manager at Synovus Trust Co., which manages about $12 billion, who calculated the metric using data from eMarketer. Facebook and Twitter trade at 19.4-times and 13-times their respective advertising revenue, he calculated using research estimates.
“It’s not cheap,” said Mr. Morgan. “I’m probably going to be cautious going into the IPO. We do own Facebook and Google, so the question is, ‘is there a place at the table for Snap, or is it going to go the way of Twitter?’ Because…