a) Why they need so much money? "Need" is probably the wrong word. I imagine they're trying to maximize their return: sell enough stock to make lots of money,

a) Why they need so much money? "Need" is probably the wrong word. I imagine they're trying to maximize their return: sell enough stock to make lots of money, but not so much as to flood the market. b) Why they are worth so much? That's the question, and it really does boil down to "they're worth what people will pay". One side might argue that it's a game of musical chairs--someone assuming they can find a greater sucker to buy into it for more money down the road. Another side might be that they have a massive user base of people just starting to make money (high school & college graduates) who are willing to spend $5/mo on stickers and filters and stuff, as well as watch some ads. If they can effectively maintain their audience (a huge "if"), they will make lots of money. If they lose them to the next funny app, then they'll be a gigantic bust. So far they've continued to grow.... (Personally I think they're trying to IPO before the bottom falls out, but hey, what do I know)