Facebook wanted to gobble up mobile app Snapchat, much as it did with Instagram, only this time the social network offered three times the amount, according to a new report.
The Wall Street Journal reported - citing unnamed sources - that Snapchat recently rejected a $3 billion all-cash bid from Facebook. What's more, the two-year-old mobile app spurned a Facebook buyout twice. The social network had earlier offered to buy Snapchat for more than $1 billion, the same price it paid for Instagram in 2012.
It seems Snapchat is listening to other investors and potential acquirers, and it believes a $4 billion valuation is on the horizon. Evan Spiegel, the company's 23-year-old co-founder and CEO, will not consider an acquisition until 2014, when he hopes the service's user and message numbers will grow enough to encourage a higher and more enticing bid.
If the story is true, Spiegel is certainly taking a gamble. Especially since his mobile app, which focuses on brief mobile messages, is popular among teenagers only and doesn't have a defined revenue model. Then again, there are many tech start-ups banking in recent years with absolutely no revenue. Just look at Twitter: it went public and has a $25 billion dollar valuation, despite being unprofitable to date.
Snapchat, much like Twitter and many of these other companies in Silicon Valley, has raised plenty of money from investors to fund day-to-day processes. In June, the company raised $60 million from Institutional Venture Partners and others. That's probably because Snapchat sees roughly 350 million messages or “snaps” a day. Investors love this sort of usage and potential, and apparently Facebook does as well.