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Snapchat thinks it's worth more than $4B because it hasn't monetized yet

Posted: , by Michael H.

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Snapchat thinks it's worth more than $4B because it hasn't monetized yet
Yesterday, we heard that not only has Snapchat rejected an offer of $3 billion in cash from Facebook, but the company also reportedly has an offer on the table for around $4 billion, and yet CEO Evan Spiegel still has no plans to sell the company for at least a year. It turns out that the reasoning for the patience is quite simple though: Snapchat hasn't even begun to monetize yet.

Instagram was purchased by Facebook for $1 billion because of its user base, despite the fact that it consistently lost money. Snapchat doesn't want to follow that path, and it believes that it has the perfect model to allow for monetization. According to an investor (not Snapchat itself), the key is apparently the fact that users have to press and hold on the screen to view a Snapchat message. Because of this action, you can almost guarantee the user's eyes are on the screen, making that the perfect time to slip in an ad. 

This is a much more powerful draw than in-stream ads that you'd find on Facebook or Twitter, where there is no guarantee that users will see the ad, let alone stop and look at it. CEO Spiegel has said he is open to the idea of serving ads, but that isn't the plan just yet, and there's no guarantee the app will serve ads in the fashion described above. We think an implementation like that would certainly be great for ad engagement, but it would also lead to more of a backlash from users because the ads would be so forced. Users like to have more of an option when it comes to ads, as we all know with the prevalence of ad-blockers.

source: AllThingsD

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posted on 14 Nov 2013, 09:55 13

1. McLTE (Posts: 711; Member since: 18 Oct 2011)


Idk.. I would have taken the money and retired.. or work on something new.

Things like this are volatile. Who knows when a developer will release the next big thing and leave snapchat in the dust.

The unfortunate thing is the success of an app like this means to cash in they will bring ads to it, which will more than likely ruin the experience - especially if FB gets ahold of it.

4Billion? I couldn't turn down that payday!

posted on 14 Nov 2013, 10:00 8

2. androiphone20 (Posts: 1472; Member since: 10 Jul 2013)


a100%, the chumps will regret it down the road especially when they choose to monetize this overrated...thing

posted on 14 Nov 2013, 16:58

17. Dingy_cellar_dweller (Posts: 185; Member since: 16 Mar 2013)


It got to a 3B offer because I'm sure they rejected earlier offers of lesser amounts.
What if they accepted an offer of 50 Million early on.

posted on 14 Nov 2013, 10:23

5. cezarepc (Posts: 571; Member since: 23 Nov 2012)


I would've sold it and retired on my mone'y interest alone. On the side I'll probably invest in some start ups that shows promise.

posted on 14 Nov 2013, 10:59 1

8. Dastrix (Posts: 596; Member since: 23 Nov 2012)


That's true, but I guess when its actually monetized and we know what its valuated at, then we can say for sure whether they made a good decision of rejecting $3B or accepting $4B for that matter.

posted on 14 Nov 2013, 12:25

13. donphone (Posts: 47; Member since: 20 Oct 2013)


Smells like Yahoo...

posted on 14 Nov 2013, 10:10 1

3. _Bone_ (Posts: 2132; Member since: 29 Oct 2012)


It's absolutely crazy, you start some project, Instagram, Snapchat, Waze, whatever, and a few years later BILLIONS are flying around. I mean how many of us are on the geeky side of things? Imagine McLTE or androiphone20 above me coming up with something, and the road from PA forums leads to private jets and an artificial island at the Caribbeans or Dubai.

posted on 14 Nov 2013, 11:11

9. androiphone20 (Posts: 1472; Member since: 10 Jul 2013)


*high five* that, would be awesome. we just need something like livecode

posted on 14 Nov 2013, 10:22 2

4. oNEWorld (Posts: 140; Member since: 01 Aug 2013)


how is this thing worth more than instagram lol

posted on 14 Nov 2013, 10:57 1

6. androiphone20 (Posts: 1472; Member since: 10 Jul 2013)


top of the line sexting tool ;)

posted on 14 Nov 2013, 10:58

7. androiphone20 (Posts: 1472; Member since: 10 Jul 2013)


top of the line sexting tool ;)

posted on 14 Nov 2013, 11:45

12. alpinejason (Posts: 262; Member since: 06 Sep 2011)


or anything for that matter

posted on 14 Nov 2013, 11:26

10. PK1983 (Posts: 176; Member since: 08 Aug 2012)


New tech bubble about to pop.

posted on 14 Nov 2013, 11:43

11. jroc74 (Posts: 4934; Member since: 30 Dec 2010)


I WISH I could just turn down a 3 billion dollar offer like it was nothing.... I woulda sold it before the phone hung up or the lunch, dinner got served..

posted on 14 Nov 2013, 13:00 1

14. timepilot84 (Posts: 85; Member since: 16 Aug 2012)


I read an article this morning that explains why the company is probably worth $4B. They have a patented technology that requires a user to press and hold the screen in order to see content. If you don't press and hold, you don't watch a Snapchat picture or video. For mobile devices, this is the key to ensuring that users are actively consuming content. Including advertisers. This ability to confirm that users are exposed to advertising is worth a TON.

posted on 14 Nov 2013, 13:58

15. NexusX (Posts: 133; Member since: 16 May 2013)


sometimes i begin to question the value of online advertising, i mean how do we measure the efficacy of online advertising? how do we quantify the value of advertising exposure? does anyone find it incredible how Google/Facebook managed bring in hundreds of billions of dollars from advertising alone? how has advertising changed from television to internet? how much value has mobile/online adverstising created over TV in the past decade?

posted on 14 Nov 2013, 14:49

16. LiyanaBG (Posts: 345; Member since: 07 Nov 2013)


sometimes its good to keep things for a little longer. i think they made the right decision they believe they can do better than this. just like youtube,Instagram are valued more now after they got sold. they believe that there app is worth more they might get the right price if they wait a little longer.

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