Snapchat turns down $3 Billion Facebook acquisition offer
Posted by: Jon Ben-Mayor on 11/14/2013 04:52 AM
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Snapchat which is known for it's disappearing pictures seconds after being viewed turned down a multi-billion dollar offer for acquisition from Facebook.
According to the Wall Street Journal, the offer, and rebuff, came as Snapchat is being wooed by other investors and potential acquirers. Chinese e-commerce giant Tencent Holdings had offered to lead an investment that would value two-year-old Snapchat at $4 billion.
Evan Spiegel, Snapchat’s 23-year-old co-founder and CEO, will not likely consider an acquisition or an investment at least until early next year, the people briefed on the matter said. They said Spiegel is hoping Snapchat’s numbers – of users and messages – will grow enough by then to justify an even larger valuation, the people said.
A Snapchat spokeswoman declined to comment.
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.
Facebook is interested in Snapchat because more of its users are tapping the service via smartphones, where messaging is a core function. Facebook has rapidly increased the share of its revenue coming from mobile advertising, but said last month that fewer young teens were using the service on a daily basis.
Tencent, a diverse Internet company, owns WeChat, a major messaging service in China, and has a stake in KaKao, a popular South Korean app. It was vying to lead a group of investors that had offered to invest $200 million in Snapchat at a valuation of roughly $4 billion.
Looking to Chinese company WeChat, IBTimes quotes Spiegel as saying: "They grew their business in the absence of a brand advertising market so they had to do it through in-app transactions and gaming services and they're now generating 90% of their $2.5bn [revenue] a quarter through in-app transaction."
Expanding on this, the young CEO believes Facebook and Twitter are seen as utilities and will not be paid for, but apps like Snapchat are considered entertainment services, and "people pay a lot for entertainment".
According to the Wall Street Journal, the offer, and rebuff, came as Snapchat is being wooed by other investors and potential acquirers. Chinese e-commerce giant Tencent Holdings had offered to lead an investment that would value two-year-old Snapchat at $4 billion.Evan Spiegel, Snapchat’s 23-year-old co-founder and CEO, will not likely consider an acquisition or an investment at least until early next year, the people briefed on the matter said. They said Spiegel is hoping Snapchat’s numbers – of users and messages – will grow enough by then to justify an even larger valuation, the people said.
A Snapchat spokeswoman declined to comment.
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.
Facebook is interested in Snapchat because more of its users are tapping the service via smartphones, where messaging is a core function. Facebook has rapidly increased the share of its revenue coming from mobile advertising, but said last month that fewer young teens were using the service on a daily basis.
Tencent, a diverse Internet company, owns WeChat, a major messaging service in China, and has a stake in KaKao, a popular South Korean app. It was vying to lead a group of investors that had offered to invest $200 million in Snapchat at a valuation of roughly $4 billion.
Looking to Chinese company WeChat, IBTimes quotes Spiegel as saying: "They grew their business in the absence of a brand advertising market so they had to do it through in-app transactions and gaming services and they're now generating 90% of their $2.5bn [revenue] a quarter through in-app transaction."
Expanding on this, the young CEO believes Facebook and Twitter are seen as utilities and will not be paid for, but apps like Snapchat are considered entertainment services, and "people pay a lot for entertainment".
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