Is Snapchat the Next Facebook, or the Next Twitter?

With Snap Inc.’s IPO more a matter of when than if, the real question is whether Snapchat’s parent company will thrive like Facebook or wither like Twitter under the glare of the public markets.

Snap is said to have already confidentially filed paperwork for an initial public offering, which is expected to ultimately pin the company with a valuation of as much as $25 billion — nearly twice Twitter’s $12.9 billion market cap, but still a long ways from Facebook’s value of $357.2 billion.

Whether Snap can grow to not just be the buzzy new name, but a digital giant, will depend on just how much the company can offer its users and advertisers and if it can develop the corporate chops necessary to flourish under a pubic company’s scrutiny.

The bet is that Snapchat has a chance given how far it’s come and how quickly — its ad business hit with full force this year and is projected to drive $360 million in revenue for 2016 and $1 billion next year. Key to the equation is Snapchat’s ability to know just who is seeing those ads and where they are when they get the message.

Even so, making the ultra-big time is a tall order for a company that rose to prominence as a way for teenagers to send racy, but quickly disappearing pictures to each other.

But chief executive officer Evan Spiegel has proven to be canny, for instance turning down Facebook’s Mark Zuckerberg’s offer reportedly buy Snapchat for $3 billion not long after its founding.

Not bad for a twentysomething ceo who finds himself atop an increasingly important promotional outlet for fashion brands.

“They’re looking much more like Facebook than Twitter,” said Nick Einstein, vice president of research for marketing technology firm The Relevancy Group. “Snapchat wasn’t around four years ago and it’s going to be [valued at] $25 billion and specifically because the advertising experiences are engaging. Display ads, big diminishing returns, it’s tough to get people clicking through.”

Brands like what the platform has to offer, particularly because they can not only reach their customers, but find out more about them in the process.

Einstein said Snap and its sponsored geo-filters drive relevant experiences that can be tagged to a specific location and understood through data.

The challenge now is for the company to be able to roll out that kind of offering at scale.

And Einstein said Snap is also nudging into other areas, for instance, launching Spectacles, sunglasses that take videos.

A broader approach was signaled with a name change in September — cutting Snapchat down to Snap.

“They are certainly looking to be wider, they’re looking to expand,” Einstein said. “They just started generating revenues this year….They are just a little baby getting started, but based on what we’ve seen so far, the kind of hockey stick growth, the data at their disposal and interesting ad opportunities, we like their chances, at least in the near term.”

Jon Bucci, ceo of Veri, which connects influencers with their fans, said Snap’s venture capital backers are going to want to pull their money out eventually, making an IPO a sure thing.

“The timing is quite optimal,” Bucci said. “It has been a slow year for IPOs, the newly concluded presidential race has resulted in an optimistic Wall Street, and, Snapchat remains the heavy favorite for advertising dollars targeting 13- to 24-year-olds.”

Bucci said Snapchat has plenty of room to grow with “new markets to conquer as most users are North American, new possible demographics as users are mostly under 25 years of age, and, novel revenue streams to explore as it has only really tapped into advertising dollars.”

The offering should give Snap whatever money it needs to try to sustain its expansion, but Bucci noted, “This is easier said than done.

“We have all witnessed Twitter’s failure to appeal internationally and Vine’s inability to successfully monetize,” he said. “Nevertheless, IPOs in social media and messaging platforms provide a fresh chance to figure out how to turn such companies into profitable corporations. It is definitely an exciting proposition and it seems safe to predict that investors will be quick to jump at the opportunity to own a piece of Snapchat.”

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