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Snapchat Turns Down $3 Billion Offer

18 November 2013

The 23-year-old CEO of Snapchat has come a long way since first conceptualizing the ephemeral image-based messaging app two years ago. Evan Spiegal’s company has come so far, in fact, that he was confident enough to turn down a $3 billion offer—yes, that’s billion with a ‘b’—from Facebook last week. Many initial reactions were shocked, both at the immensity of Facebook’s offer and at Snapchat’s outright rejection.

Part of what makes this situation so incredible is that Snapchat is not a profitable company. In fact, the popular messaging only first received investments 8 months ago. However, the app is insanely popular, especially among teens, and that initial investment was a healthy 13 million. Plus, those investors estimated Snapchat’s total value to be about 70 million dollars—and the app has continued to grow in the months since that investment.

Snapchat raised an additional 60 million dollars in June and it’s valuation has continued to rise with the interest of investors. But despite it’s massive success, Snapchat has not monetized its app and is in no way profitable—so why did it’s CEO scoff at Facebook’s offer of $3 billion? It’s likely that Snapchat’s young founders realize that Facebook is losing it’s grip and don’t want their unique app to be assimilated into Zuckerberg’s massive company.

Not to mention that investors are now suggesting Snapchat is worth more than the $3 billion Facebook offered.  There is also a rumour circulating that Google offered Snapchat a whopping $4 billion in an attempt to compete with Facebook’s offer. Perhaps Snapchat does not want to follow the mistakes of Instagram and sell-out too soon, before the app has peaked in its valuation.

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