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Snapchat - $3 Billion Acquisition Offer from Facebook (1 Viewer)

Arizona Ron

Footballguy
By Evelyn M. Rusli and Douglas MacMillan

Snapchat, a rapidly growing messaging service, recently spurned an all-cash acquisition offer from FacebookFB +4.52% for $3 billion or more, according to people briefed on the matter.

The offer, and rebuff, came as Snapchat is being wooed by other investors and potential acquirers. Chinese e-commerce giant Tencent HoldingsTCEHY -1.33% 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.

The approaches to Snapchat come amid rising exuberance for social media, and mobile-messaging upstarts in particular. TwitterTWTR +1.67%, an unprofitable short-messaging service, is valued at roughly $25 billion after its initial public offering last week. Pinterest, an image-sharing app, last month raised $225 million from investors who valued the company, which also has no revenue, at $3.8 billion.

Facebook had earlier offered to buy Snapchat for more than $1 billion, the people briefed on the matter said. In recent weeks, Facebook representatives contacted Snapchat again to discuss an all-cash offer that would have valued Snapchat at $3 billion or more. At that price, it would be Facebook’s largest acquisition, more than double its nearly $1 billion deal for photo-sharing social network Instagram in 2012.

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.

In June, Snapchat raised $60 million from investors including Institutional Venture Partners; that round valued the company at $800 million.

Three months later, Snapchat said its usage had nearly doubled, to 350 million messages or “snaps” per day, up from 200 million in June.

If Snapchat pursues an investment early next year, Spiegel has told investors he would like to sell a block of his own stock, according to people familiar with those conversations

http://blogs.wsj.com/digits/2013/11/13/snapchat-spurned-3-billion-acquisition-offer-from-facebook/#!

 
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It'll happen eventually. Facebook is yet another company that refuses to innovate or create, but instead just buys all their competition straight out. Capitalism. Yay?

 
And the whole "disappear after a few seconds" is not true, I can take a picture of what I'm looking at on my phone.

 
And the whole "disappear after a few seconds" is not true, I can take a picture of what I'm looking at on my phone.
shhhhhhhhhh not all the females have caught on to this yet... "It only lasts a few seconds, then it's automatically deleted. Come on, no one will EVER see it again...."

 
And the whole "disappear after a few seconds" is not true, I can take a picture of what I'm looking at on my phone.
shhhhhhhhhh not all the females have caught on to this yet... "It only lasts a few seconds, then it's automatically deleted. Come on, no one will EVER see it again...."
SnapChat shows the originating user if someone took a screenshot of their message.

 
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And the whole "disappear after a few seconds" is not true, I can take a picture of what I'm looking at on my phone.
shhhhhhhhhh not all the females have caught on to this yet... "It only lasts a few seconds, then it's automatically deleted. Come on, no one will EVER see it again...."
SnapChat shows the originating user if someone took a screenshot of their message.
The world has passed me when I can't understand the point of such a service let alone why it would be worth $3B.

 
And the whole "disappear after a few seconds" is not true, I can take a picture of what I'm looking at on my phone.
shhhhhhhhhh not all the females have caught on to this yet... "It only lasts a few seconds, then it's automatically deleted. Come on, no one will EVER see it again...."
SnapChat shows the originating user if someone took a screenshot of their message.
The world has passed me when I can't understand the point of such a service let alone why it would be worth $3B.
Mostly because younger adults want to say/do whatever online but have found out the hard way that it's being tracked. The "We like your resume, but then we read your Tweets" is a real scare to college kids - enter SnapChat.

This makes them feel like they're is some internet freedom. Which is not complete anonymity but at least it's not a company seeing a pic of a potential candidate on Facebook getting high or something.

I'm still amazed at what people put on Facebook - oh, and the "It's set to Private" is a joke btw.

 
Take the money.
I'm more interested in why SnapChat wouldn't simply add advertising to generate revenue :confused:

"hey large company, do you want about 350 million views of your ad a day? Sign here".
Probably for the fear that ads can deter people from using the app and the concept is simple enough for competitors to offer the same thing with no ads.
Ads haven't slowed down YouTube.
Ads have made Youtube pretty awful to use.

 
And the whole "disappear after a few seconds" is not true, I can take a picture of what I'm looking at on my phone.
shhhhhhhhhh not all the females have caught on to this yet... "It only lasts a few seconds, then it's automatically deleted. Come on, no one will EVER see it again...."
SnapChat shows the originating user if someone took a screenshot of their message.
The world has passed me when I can't understand the point of such a service let alone why it would be worth $3B.
Mostly because younger adults want to say/do whatever online but have found out the hard way that it's being tracked. The "We like your resume, but then we read your Tweets" is a real scare to college kids - enter SnapChat.

This makes them feel like they're is some internet freedom. Which is not complete anonymity but at least it's not a company seeing a pic of a potential candidate on Facebook getting high or something.

I'm still amazed at what people put on Facebook - oh, and the "It's set to Private" is a joke btw.
That, plus SnapChat is very convenient and easy to use. Sending a 10 second video to friends is incredibly simple, compared to sending via MMS.

 
Take the money.
I'm more interested in why SnapChat wouldn't simply add advertising to generate revenue :confused:

"hey large company, do you want about 350 million views of your ad a day? Sign here".
Probably for the fear that ads can deter people from using the app and the concept is simple enough for competitors to offer the same thing with no ads.
Ads haven't slowed down YouTube.
Ads have made Youtube pretty awful to use.
I agree - there has been more than once were I sat through a 30 sec commercial to watch a 1min video clip but I'm obviously not the only one still using YouTube.

 
And the whole "disappear after a few seconds" is not true, I can take a picture of what I'm looking at on my phone.
shhhhhhhhhh not all the females have caught on to this yet... "It only lasts a few seconds, then it's automatically deleted. Come on, no one will EVER see it again...."
SnapChat shows the originating user if someone took a screenshot of their message.
The world has passed me when I can't understand the point of such a service let alone why it would be worth $3B.
Mostly because younger adults want to say/do whatever online but have found out the hard way that it's being tracked. The "We like your resume, but then we read your Tweets" is a real scare to college kids - enter SnapChat.

This makes them feel like they're is some internet freedom. Which is not complete anonymity but at least it's not a company seeing a pic of a potential candidate on Facebook getting high or something.

I'm still amazed at what people put on Facebook - oh, and the "It's set to Private" is a joke btw.
you seem to know what you're talking about, but yet you don't understand why adding advertisements to these messages will lower usage or open doors for competitors to steal market share?
 
Take the money.
I'm more interested in why SnapChat wouldn't simply add advertising to generate revenue :confused:

"hey large company, do you want about 350 million views of your ad a day? Sign here".
Probably for the fear that ads can deter people from using the app and the concept is simple enough for competitors to offer the same thing with no ads.
Ads haven't slowed down YouTube.
Ads have made Youtube pretty awful to use.
I agree - there has been more than once were I sat through a 30 sec commercial to watch a 1min video clip but I'm obviously not the only one still using YouTube.
AdBlock is a joy. No YouTube ads, no in-page ads, even the ads during the breaks in The Daily Show somehow get skipped. Brilliant.

 
I'm going to assume the founder holds at least 33 points. That means he turned down 1 billion dollars cash. If next year it gets valued at 12 would you be upset with your 1 instead of 4 billion? This isn't the third partner in Apple selling one third for 2500 bucks.

 
And the whole "disappear after a few seconds" is not true, I can take a picture of what I'm looking at on my phone.
shhhhhhhhhh not all the females have caught on to this yet... "It only lasts a few seconds, then it's automatically deleted. Come on, no one will EVER see it again...."
SnapChat shows the originating user if someone took a screenshot of their message.
The world has passed me when I can't understand the point of such a service let alone why it would be worth $3B.
Mostly because younger adults want to say/do whatever online but have found out the hard way that it's being tracked. The "We like your resume, but then we read your Tweets" is a real scare to college kids - enter SnapChat.

This makes them feel like they're is some internet freedom. Which is not complete anonymity but at least it's not a company seeing a pic of a potential candidate on Facebook getting high or something.

I'm still amazed at what people put on Facebook - oh, and the "It's set to Private" is a joke btw.
you seem to know what you're talking about, but yet you don't understand why adding advertisements to these messages will lower usage or open doors for competitors to steal market share?
I agree that usage would go down, but I doubt it goes from 350 Million a day to zero. Even if "snaps" go down to 1 million a day, there are still tons of advertisers that want that kind of 'confirmed' exposure.

Advertisers spend millions on TV ads without knowing how many people actually saw them (whether they were annoyed by it or not). The internet and social media has a better hold on targeting markets and providing data to the recipients of said ads.

 
i feel like zuckerberg is in the middle of the plot of "brewsters millions part ii" trying to throw as much money as he can at stupid ####.

 
He should sell. His app is popular today, but there is no certainty that it will be tomorrow. People are fickle. 3 or 4 billion for 2 years work is a fantastic haul. Holding out for more is beyond greedy, and frankly I hope it fails miserably now.

 
Take the money.
I'm more interested in why SnapChat wouldn't simply add advertising to generate revenue :confused:

"hey large company, do you want about 350 million views of your ad a day? Sign here".
Probably for the fear that ads can deter people from using the app and the concept is simple enough for competitors to offer the same thing with no ads.
Ads haven't slowed down YouTube.
Youtube is different since they have amassed such a dominant footing in the video arena that they are almost too big to fail. But having said that, Google has been ruining Youtube lately and more and more people are starting to get fed up with them. It will only take one competitor to put up a better video sharing site to take members away from Youtube.

 
He should sell. His app is popular today, but there is no certainty that it will be tomorrow. People are fickle. 3 or 4 billion for 2 years work is a fantastic haul. Holding out for more is beyond greedy, and frankly I hope it fails miserably now.
With the explosion of social media, the apps that have such large amounts of dedicated users are hard to find. There is a reason the price of popular apps keep rising. Instagram went for 1B and analysts were in shock at that price. I bet you if they were on the market today, they would fetch way more then the 1B.

 
Facebook is the reason Snapchat exists. It is the anti Facebook. If FB bought SC, it would possibly destroy SC.

 
Facebook is the reason Snapchat exists. It is the anti Facebook. If FB bought SC, it would possibly destroy SC.
It wouldn't be the first acquisition with the intension of destroying the company being acquired.

"If you can't beat 'em, buy 'em, then kill them".

 
He should sell. His app is popular today, but there is no certainty that it will be tomorrow. People are fickle. 3 or 4 billion for 2 years work is a fantastic haul. Holding out for more is beyond greedy, and frankly I hope it fails miserably now.
With the explosion of social media, the apps that have such large amounts of dedicated users are hard to find. There is a reason the price of popular apps keep rising. Instagram went for 1B and analysts were in shock at that price. I bet you if they were on the market today, they would fetch way more then the 1B.
Yeah, without a doubt. Instagram, Twitter, and SnapChat are the keys to getting at young consumers.

 
Mostly because younger adults want to say/do whatever online but have found out the hard way that it's being tracked. The "We like your resume, but then we read your Tweets" is a real scare to college kids - enter SnapChat.
Fair enough, but how hard would it be for competitors to add the same functionality?

 
Mostly because younger adults want to say/do whatever online but have found out the hard way that it's being tracked. The "We like your resume, but then we read your Tweets" is a real scare to college kids - enter SnapChat.
Fair enough, but how hard would it be for competitors to add the same functionality?
Would teens just trust it and adopt it? The key is SN has trust and has a huge following already. It's an established brand which is important when you are talking about privacy/security.

 
He should sell. His app is popular today, but there is no certainty that it will be tomorrow. People are fickle. 3 or 4 billion for 2 years work is a fantastic haul. Holding out for more is beyond greedy, and frankly I hope it fails miserably now.
This.

 
Mostly because younger adults want to say/do whatever online but have found out the hard way that it's being tracked. The "We like your resume, but then we read your Tweets" is a real scare to college kids - enter SnapChat.
Fair enough, but how hard would it be for competitors to add the same functionality?
Would teens just trust it and adopt it? The key is SN has trust and has a huge following already. It's an established brand which is important when you are talking about privacy/security.
Sounds to me then like it's a Facebook killer. I've said for years that if someone comes up with a Facebook alternative with real privacy then it will be huge. This appears to do it, although I read that there are ways for people to save your messages without you knowing. Still, at least your info is not out there permanently like FB.

Now I don't blame the guy for not wanting to sell.

 
People who say "no" to this sort of thing have absolutely no concept of how much money that is.

As James caan said in the way of the gone, 15 million dollars isn't money...it's a motive with a universal adapter. So how much is three billion?

 
He should sell. His app is popular today, but there is no certainty that it will be tomorrow. People are fickle. 3 or 4 billion for 2 years work is a fantastic haul. Holding out for more is beyond greedy, and frankly I hope it fails miserably now.
With the explosion of social media, the apps that have such large amounts of dedicated users are hard to find. There is a reason the price of popular apps keep rising. Instagram went for 1B and analysts were in shock at that price. I bet you if they were on the market today, they would fetch way more then the 1B.
The problem is that "dedicated users" are a myth.

 
Mostly because younger adults want to say/do whatever online but have found out the hard way that it's being tracked. The "We like your resume, but then we read your Tweets" is a real scare to college kids - enter SnapChat.
Fair enough, but how hard would it be for competitors to add the same functionality?
Would teens just trust it and adopt it? The key is SN has trust and has a huge following already. It's an established brand which is important when you are talking about privacy/security.
Sounds to me then like it's a Facebook killer. I've said for years that if someone comes up with a Facebook alternative with real privacy then it will be huge. This appears to do it, although I read that there are ways for people to save your messages without you knowing. Still, at least your info is not out there permanently like FB.

Now I don't blame the guy for not wanting to sell.
Definitely not a FB killer. It just doesn't "do" as much as FB.

 
<------ Digital media executive.... This is my line of work - 3 start ups, current company went public, there through it all.

Instagram shouldn't have sold for $1 billion, not even close. They are dominating the youth market. A lot of recent statistics have shown the youth moving away in masses from FB, & I think the majority can figure out why. FB is awful, & at this point their goal is to buy just about anything that can even be close to competitor.

Snapchat on the other hand just turned down a fairly aggressive offer. We can all speculate as to why, but knowing 3 founders of internet companies and their personalities, I would assume the founders are very intelligent and overly confident in themselves (sometimes good qualities and other times dangerous).

This is where the valuation makes my head spin a little; Pandora, a much more developed product has roughly 71 million users with A LOT more time spent using site than Snapchat. Their valuation is currently about $5 billion, & their stock has been on absolute tear lately. Snapchat, with an undeveloped revenue stream and roughly 25 million users (almost 1/3 of Pandora) turning down $3 bil is a head scratcher IMO. Granted they'll never have to deal with the same licensing issues as Pandora, but nonetheless a long way to go before becoming a finished product.

One thing in the near future is for sure with Snapchat, they'll have no trouble raising money at a high valuation after turning this offer down. I think it's possible for investors to get left holding a bag of hot air if they come in for too much, but who knows, maybe the founders are all sick Einsteins.

 
Mostly because younger adults want to say/do whatever online but have found out the hard way that it's being tracked. The "We like your resume, but then we read your Tweets" is a real scare to college kids - enter SnapChat.
Fair enough, but how hard would it be for competitors to add the same functionality?
Would teens just trust it and adopt it? The key is SN has trust and has a huge following already. It's an established brand which is important when you are talking about privacy/security.
Sounds to me then like it's a Facebook killer. I've said for years that if someone comes up with a Facebook alternative with real privacy then it will be huge. This appears to do it, although I read that there are ways for people to save your messages without you knowing. Still, at least your info is not out there permanently like FB.

Now I don't blame the guy for not wanting to sell.
Definitely not a FB killer. It just doesn't "do" as much as FB.
Yet. At some point they could add the FB features while keeping the privacy that has made them popular.

 
Mostly because younger adults want to say/do whatever online but have found out the hard way that it's being tracked. The "We like your resume, but then we read your Tweets" is a real scare to college kids - enter SnapChat.
Fair enough, but how hard would it be for competitors to add the same functionality?
Would teens just trust it and adopt it? The key is SN has trust and has a huge following already. It's an established brand which is important when you are talking about privacy/security.
Sounds to me then like it's a Facebook killer. I've said for years that if someone comes up with a Facebook alternative with real privacy then it will be huge. This appears to do it, although I read that there are ways for people to save your messages without you knowing. Still, at least your info is not out there permanently like FB.

Now I don't blame the guy for not wanting to sell.
Definitely not a FB killer. It just doesn't "do" as much as FB.
Yet. At some point they could add the FB features while keeping the privacy that has made them popular.
But isn't essentially the point of Facebook to be a way to publicly put yourself on display on the Internet? Even if a person is private, they likely have hundreds to thousands of friends that can view everything.

 
SC is scary from a parent's POV. A lot of pedos sending out snaps of their junk.
Mostly because younger adults want to say/do whatever online but have found out the hard way that it's being tracked. The "We like your resume, but then we read your Tweets" is a real scare to college kids - enter SnapChat.
Fair enough, but how hard would it be for competitors to add the same functionality?
Would teens just trust it and adopt it? The key is SN has trust and has a huge following already. It's an established brand which is important when you are talking about privacy/security.
Sounds to me then like it's a Facebook killer. I've said for years that if someone comes up with a Facebook alternative with real privacy then it will be huge. This appears to do it, although I read that there are ways for people to save your messages without you knowing. Still, at least your info is not out there permanently like FB.

Now I don't blame the guy for not wanting to sell.
Definitely not a FB killer. It just doesn't "do" as much as FB.
Yet. At some point they could add the FB features while keeping the privacy that has made them popular.
But isn't essentially the point of Facebook to be a way to publicly put yourself on display on the Internet? Even if a person is private, they likely have hundreds to thousands of friends that can view everything.
Most people want to be able to make some things public and keep other things private - preferably with no record of it.

There are three levels of privacy a social media site should provide:

Public

Private - data kept

Private - data deleted

FB only provides the first two but doesn't provide a way for people to send things that will be permanently deleted without a record. As someone mentioned, I don't believe anyone trusts FB with their privacy even if they were to include a Snapchat-type feature.

 

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