Is Snapchat really worth $10 billion?
The Wall Street Journal has confirmed that according to the firm's latest round of funding with investors, including the venture capitalist firm Kleiner Perkins, the self-destructing photo messaging service is now valued at an eye-popping $10 billion, even in spite of it still making a far less eye-popping zero in profits.
That's a heck of a lot more than the $3 billion that Facebook's Mark Zuckerberg was willing to pay to acquire the startup headed by 24-year-old Evan Spiegel.
But Snapchat says it doesn't care about its valuation, telling CNET:
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So are investors in Snapchat getting good value for their money? With 100 million daily active users and an astonishing growth rate in both users and engagement, Snapchat does seem to stand at least a chance of making some money sometime soon. But $10 billion? Nobody really knows. Technology and technology habits and trends are fast-changing, and what's popular today won't necessarily be popular tomorrow. Just ask Rupert Murdoch, after his failed acquisition of early social networking trailblazer MySpace.
The Silicon Valley growth model of building a platform that lots of people want to use before trying to make money out of it might have produced some amazing platforms, including Instagram, Facebook, and Snapchat, but it doesn't really give investors a good idea of how profitable different platforms will ultimately become. Snapchat may yet become a world-conquering tech empire, as big as Apple or Google. Or it might fade to nothing. It's a risky bet.
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John Aziz is the economics and business correspondent at TheWeek.com. He is also an associate editor at Pieria.co.uk. Previously his work has appeared on Business Insider, Zero Hedge, and Noahpinion.
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