Snapchat, the company that has defined ‘ephemeral messaging’, is reportedly in discussions about possible investment from companies including Chinese e-commerce giant Alibaba that would value it at $10 billion.
A Bloomberg source said the app maker is in ongoing talks with investors, although another source told the Financial Times that discussions have not progressed far and a deal with Alibaba is unlikely.
If true, the news suggests that Snapchat’s founder Evan Spiegel made the right decision when he reportedly turned down a $3 billion bid from Facebook late last year. Facebook subsequently agreed to acquire messaging service WhatsApp for $19 billion.
Snapchat, which deletes images after they have been viewed by users, claims that more than 700 million pictures are sent via its service and more than 500 million stories viewed every day. It recently added an option for users to chat with text.
Such has been the success of Snapchat, that Facebook launched Slingshot, which only allows users to view received images after they have sent a reply. Just this week, there was a low key launch by Instagram of Bolt, which also deletes images after they have been viewed.
Snapchat has faced some challenges though, most notably when hackers exposed a vulnerability in the service in January, forcing it to update the Android and iOS apps to better protect the privacy of users.
Other startups, including Airbnb and Dropbox, have achieved similar valuations, while mobile limo service Uber was valued at $17 billion in June when it raised $1.2 billion in funding. Unlike Uber, Snapchat has not yet revealed a strategy for generating revenue.
Alibaba previously led a $250 million financing round of ride-sharing app Lyft in April, and a $50 million investment in app search engine Quixey. It has also funded messaging app Tango.
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