Latest reports say that the owners of the ever so popular photo messaging service Snapchat, have refused an acquisition offer from the social media giant Facebook. This offer would no doubt have turned Evan Spiegel and his colleagues into extremely wealthy people.
According to the Wall Street Journal, which cited sources close to the company, the social network has offered approximately $3 billion to purchase Snapchat, that is more than double the amount Yahoo paid for Tumblr earlier this year. Facebook are not the only interested party in this matter as several other companies want to either acquire or invest in the service. For example, China’s Tencent Holdings, the owner of WeChat, proposed to lead a funding round that would value Snapchat at $4 billion.
Snapchat was developed back in 2011 by a group of Stanford University students. The service allows users to take photos and record videos that will be deleted several seconds after they have been viewed by the recipient. The company currently produces no revenue, but it has attracted a huge member base, and is especially popular among teenagers and this is the bait; the group of young teenagers with what seems like a limitless amount of cash to spend, which advertisers are willing to pay high stakes for. Only a few months ago, in July, a report in New Statesman valued Snapchat at $860 million.
One of the main reasons for the swift climb of the Snapchat service, appears to be ‘sexting’, this is a practice of sending and receiving sexually explicit images that more than often involve varying degrees of nudity. This is, unfortunately, especially widespread among younger users of Snapchat. Developers, however, insist that the functionality of the service has not been adapted to enable or encourage sexting?
In the short space of time from July until now, Facebook has offered the founders $3 billion in cash, if successful; this would be the social network’s leading acquisition by a long stretch, almost tripling the amount it paid for Instagram last year.
But according to the sources, the 23-year-old CEO, Evan Spiegel, is trying to hold off on any strategic moves until early next year, hoping that the user base of the company will keep growing, thereby increasing its worth. Rumour has it that Facebook had already approached Snapchat previous to this deal, offering around $1 billion for the messaging service, although Snapchat has not issued any comments on the report.
Unprofitable but popular messaging and social services with strong mobile support, have become a key target for investment in the last year. Last week’s Twitter IPO has valued the company at more than £11 billion, while Pinterest’s recent financing round had amplified its value to approximately £2.4 billion.
[Image via salon]