Snap Inc, the owner of Snapchat, has applied to become a public company with a $4.2bn float, but in doing so revealed a $515m loss last year amid slowing gowth for the messaging app.
The firm filed public documents for a share offering last week, seeking to raise up to $3 billion ($4.2bn) in a keenly anticipated Wall Street debut.
In documents filed with the Securities and Exchange Commission, Snap said it took in $404 million in revenue last year but lost $515 million.
Snapchat, known for its disappearing messages, has become hugely popular with young smartphone users.
But the company has recently been expanding its offerings to allow publishers to deliver content through the platform.
Snapchat has partnerships with dozens of publishers and organisations, including one announced Thursday by the New York Times.
However, as soon as its accounts became public its ability to live up to a valuation of up to $25bn (£20bn) was called into question.
Snap lost $515m last year, while its filing revealed that user growth was already slowing.
At the end of 2016, Snapchat had 161 million daily users, some 60 million of which are based in the United States and 10 million in the UK.
This compares with 400 million people who use Instagram a day, and 1.2 billion who use Facebook every day. However, Snapchats user base is now higher than Twitter, which is believed to have around 140 million.
Snapchat is newer than its rivals, and still growing, but the rate of growth has slowed down significantly in recent months. In the last three months of 2016 daily users grew by 7 million, a slower rate than in most previous quarters.
Can Snapchat make money?
The filings revealed that Snap’s losses actually increased last year from $372.9m to $514.6m, muchof which was due to the extra cost of hosting all the pictures, videos and messages that run through Snapchat.
Since Snapchat was founded in 2011 it has racked up a total loss of $1.2bn, the documents show.
Snap makes money from selling adverts – companies can sponsor the lenses and filters used to augment photos, while short video clips play in between posts on the app. Last year it brought in $404.5m in revenue.
In its filing, the company warns as a potential risk factor that it “may never achieve or maintain profitability”