Snapchat has been going now for two years and the company this month turned down an acquisition offer of $3 Billion, despite making no income from the normal day to day business.
Snapchat which is dubbed the next generation messaging service was started by 23 year-old ex-Stanford University drop-out Evan Spiegel and partner Bobby Murphy who are said to have been wooed by investors and possible buyers of the company.
The California based Company has no sales or business model, but its smartphone app delivers millions of messages disappearing in less than 10 seconds [For those of you who don’t know what Snapchat actually is] which makes its messaging service a truly instant service as opposed to its rivals of Facebook and Twitter who work more as a permanent record collector.
Snapchats founders still believe there is still potential to grow, and it is reported that Snapchats users grew from 200 million in June this year to 350 Million.
This offer comes just one week after Twitter realised a market value of approximately $25 Billion after its image sharing app ‘Pinterest’ raised $225 million from investors who valued the company at $3.8 billion.
Similar tech start-up who are famous for snubbing multibillion dollar buyout offers are the likes of Groupon who famously turned down an offer from Google of almost $6 billion in 2010 as well as both Facebook and Twitter who have both turned down offers in the past, deciding to grow their businesses organically instead.
Snapchat has carved a niche in the crowded social media marketplace as it brings something new to the market with the innovative idea of having messages that delete themselves and cannot be viewed again after 10 seconds. The app is predominately popular with the 13-25 age bracket.
Facebook admitted earlier in the year that although it is making money through mobile advertising, they are finding that less and less teenagers are using its site regularly to chat to friends, and it is thought this is one of the main reasons behind the bid.
While it is forecast that Snapchat will receive more and more buyout and investment offers due to its popularity, it is unsure that how the service will make money should it continue going forward. Although it seems that Snapchat are waiting for ‘the right price’ it need to be careful that bad publicity doesn’t ruin its reputation as recently the app has come under fire from people worried about sexting and cyber bullying.
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