Report: Snapchat Rejects $3 Billion Buyout From Facebook, Waiting For Better Offer
To paraphrase the film The Social Network, you know what’s better than billions? A greater number of billions.
That seems to be the mentality of Snapchat, the impermanent messaging app that’s usage is exploding among teens. The company reportedly rejected a cash-only buyout offer of $3 billion dollars from Facebook this week. The Wall Street Journal writes that Snapchat’s 23-year-old CEO Evan Spiegel has already been offered a $4 billion deal from Tencent Holdings in China, and “will not likely consider an acquisition or an investment at least until early next year.”
Neither Snapchat nor Facebook will comment on the rumor.
The two-year old company does not generate any revenue. It has an estimated 26 million users in the US, and is gaining popularity as an alternative to Facebook; the latter recently confirmed longstanding rumors that it is losing teen users. Snapchat attracts teens for its relatively adult-free user base (i.e. no parents or other relatives); and its messages, or snaps, are deleted after several seconds, offering greater privacy.
The WSJ also notes that Pinterest and Twitter, two other rising social networks, have both been valued in the billions despite lacking any profit or even revenue.
Timothy B. Lee at the Washington Post defends Snapchat’s rejection of the deal, saying that if it can eventually make as much of off ad sales as comparable apps and websites, it will be worth even more than $3 billion.
What do you think? Was Snapchat right to turn down the offer?