Explain to me how this isn’t a social media bubble?
Because the bubble extends to a lot more than social media.
They should have sold. It’s not some crazy function that is weird or difficult to make. Any large IT powerhouse can build the function they have
So hold on. All this thing does is allow you to chat, but every message you send is erased forever after a few seconds? I can see why the erase feature is desired, just out of wanting privacy if nothing else, but I can’t believe other IM apps can’t duplicate that either. How hard would that be to program?
Gotta love these two paragraphs from the Yahoo article…
“Snapchat specializes in ephemeral mobile messages, including text or photographs, that disappear after a few seconds. The service has not generated any revenue, but is especially popular among teenagers and young adults, who use the app to send messages to friends. The approaches to Snapchat come amid rising exuberance for social media, and mobile-messaging upstarts in particular. Twitter, an unprofitable short-messaging service, is valued at roughly $25 billion after its initial public offering last week. Pinterest, an image-sharing app, last month raised $225 million from investors who valued the company, which also has no revenue, at $3.8 billion.”
How would have thought sending pictures of your junk could be so valuable.
Perhaps snapchat has some IP rights to the idea of erasing messages?
This has to be the issue. Snapchat itself might be worthless, but the patents could bevfar reaching and worth a large fortune, as opposed to the $3 billion small fortune offered. Pretty much everyone thinks BlackBerry is close to worthless as an operating company, but its patents (and secure server network) are believed to be worth billions.
Teenagers are crazy about this app.
^ This is my guess although it is not my area
Evan Spiegel isn’t old enough to remember the dot-com bust. If he was, he probably would’ve sold out some time ago.
Read a WSJ article yesterday that said that Snapchat has NO REVENUE (not profit–revenue), and NO BUSINESS PLAN.
And somebody turned down a $3,000,000,000 offer?
I agree with ZB and Geo. It’s time to sell some equities.
Not disagreeing with you that markets are getting frothy, but Instagram had 0 revenue when facebook acquired it for $1bn back in April 2012, and obviously selling equities back then would not have been the right call.
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I’m sure there was a lot involved in the valuation:
patents (although, patens are stopping companies from moving forward, see apple-google battles)
the team (developers are worth 1M a head in an acquisition)
expectation of future revenues
user-base
and maybe some value-added not for what snapchat is today, but what it could be in the right players hands (basically, google or facebook)… kind of like how land that has nothing on it isn’t valued at an empty lot, but valued at what it could be in the right hands.