Snap Chief Strategy Officer Imran Khan, expected to help lead Snap's IPO efforts. Photo by Bloomberg.
Facebook Media/Telecom

The Tax Question Facing Snap in IPO

By  |  Jan. 5, 2017 7:01 AM PST
Photo: Snap Chief Strategy Officer Imran Khan, expected to help lead Snap's IPO efforts. Photo by Bloomberg.

If Snapchat’s parent company Snap Inc. goes public this year as expected, some employees will find themselves holding stock worth millions of dollars. But much of their newfound wealth will quickly vanish—in many cases, nearly half of it will be owed in taxes.

Companywide, that could add up to tens if not hundreds of millions of dollars in cash owed, all around the same time. That’s because Snap has been awarding its employees “restricted stock units,” a type of stock award that has become widespread at the largest private tech companies, and which can trigger big tax bills for recipients in an IPO.

Get access to exclusive coverage
Read deeply reported stories from the largest newsroom in tech.
Latest Articles
 
Reality Check Facebook AR/VR
TI Reality Check: A Subdued Oculus Gaming Showcase
A screenshot from Lone Echo 2. Image from Ready at Dawn/Oculus Studios
As any videogames journalist will tell you, Nintendo puts on some of the most high-energy events in the games business, jamming them with new product announcements and attracting millions of views to streamed versions of the nearly hour-long events. While its rivals often try to mimic the spirit of the Nintendo events, with varying degrees of success, Facebook’s Oculus unit came up...
Latest Briefs
 
Snap Stops Burning Cash, Grows Revenue 66%
Data Analytics Startup Confluent Files Confidentially for IPO
Sling Launches Sports Betting Channels With DraftKings
Stay in the know
Receive a summary of the day's top tech news—distilled into one email.
Access on the go
View stories on our mobile app and tune into our weekly podcast.
Join live video Q&A’s
Deep-dive into topics like startups and autonomous vehicles with our top reporters and other executives.
Enjoy a clutter-free experience
Read without any banner ads.
Marc Andreessen and Ben Horowitz. Art by Mike Sullivan.
Exclusive Venture Capital Startups
‘These Guys Are Very Different’: Inside Andreessen Horowitz’s Rise
As recently as two years ago, the performance of Andreessen Horowitz’s investments in tech startups were average , despite the firm’s outsize public profile.
DataRobot founder and former CEO Jeremy Achin in a screengrab from a company promotional video via YouTube
Exclusive Venture Capital Startups
Conflict Over IPO, Sales Led to CEO Ouster at DataRobot
Jeremy Achin had had enough of the questions about an initial public offering. Late last year, Achin—then the CEO of DataRobot, a nine-year-old artificial intelligence startup valued at nearly $3 billion by blue-chip investors—presided over a virtual company meeting in which he responded pointedly to employee questions about when DataRobot would go public.
Dion Foxworth, co-host of the “Stock Market Moves” show, uses the Clubhouse app. Photo:Bloomberg
Exclusive Venture Capital Startups
Andreessen Horowitz Values Clubhouse at $4 Billion With DST, Tiger
Andreessen Horowitz is valuing the social media app Clubhouse at $4 billion in a round of financing with new investors DST Global and Tiger Global Management, according to a person familiar with the matter.
Data Point Google Facebook
Startups Are Poaching Facebook, Google Execs
A few days before DoorDash went public last December, the food-delivery company hired a new vice president of enterprise sales and business development, Shanna Prevé.
Dapper Labs CEO  Roham Gharegozlou. Art by Mike Sullivan
Exclusive Crypto
NFT Startup Dapper Labs Raising Money at Over $7.5 Billion Valuation
The rush of enthusiasm for blockchain-based collectives is driving an extraordinary surge of investor interest in Dapper Labs, the developer of collectibles like NBA Top Shot.
February's Super Bowl. Photo by AP
Exclusive
Sports Site Action Network Looks for Buyer as Online Betting Grows
Several sports media firms are looking for buyers or investors, hoping to cash in on the expansion of online sports betting across the U.S.