Snapchat has described Brexit as a risk to its business, adding that it could “seriously harm” the company’s operations.
Yesterday, Snapchat made headlines when it (finally) filed for a $3 billion IPO – that’s an initial public offering, which means the company is floating its business on the stock market and letting members of the public buy shares in the company. But tucked away in the IPO was a detailed breakdown of exactly why Brexit could be damaging to Snapchat’s business.
When companies post an S-1 IPO filing, they include within the document any potential risk factors i.e. reasons why you might want to consider not buying stock. According to Snapchat, “exposure to United Kingdom political developments, including the outcome of the referendum on membership in the European Union, could be costly and difficult to comply with and could seriously harm our business”.
Snapchat described how the UK’s decision to leave the EU creates “an uncertain political and economic environment”, bemoaning how the process may take “years to complete”.
The United Kingdom voted to leave the European Union last June, with the formal departure expected to begin in March this year
Part of the problem is that Snapchat says it’s licensed a portion of its intellectual property to its UK subsidiary, and wants to base a “significant portion” of international operations in the UK.
The filing explains: “The long-term nature of the United Kingdom’s relationship with the European Union is unclear, and there is considerable uncertainty when any relationship will be agreed and implemented. The political and economic instability created by
It continues: “Brexit could also have the effect of disrupting the free movement of goods, services, and people between the United Kingdom, the European Union, and elsewhere. The full effect of Brexit is uncertain and depends on any agreements the United Kingdom may make to retain access to European Union markets.”
“Consequently, no assurance can be given about the impact of the outcome and our business, including operational and tax policies, may be seriously harmed or require reassessment if our European operations or presence become a significant part of our business.”
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Do you think Snapchat is right to be worried about the consequences of Brexit? Let us know in the comments.