November 14, 2013
Snapchat Rejected $3 Billion Facebook Acquisition
redOrbit Staff & Wire Reports - Your Universe Online
Evan Spiegel, Snapchat’s 23-year-old co-founder and CEO, rejected the deal due to competing interests from other investors and potential acquirers such as China’s Tencent Holdings Ltd., which had offered to lead an investment that would value Snapchat at $4 billion, the Journal reported.
Snapchat's messaging service sends text and photos with an expiration date, after which they disappear from the recipient’s mobile device. The service is highly popular among teens wishing to add a new layer of privacy to their social sharing.
Although Snapchat doesn’t disclose its number of users, the two-year-old company said in September that it had nearly doubled its usage during the third quarter, growing from 200 million “snaps” per day in June to 350 million in September. According to figures from Pew Research, Snapchat’s mobile app has been downloaded by nine percent of all US mobile phone users.
Spiegel is not expected to consider any acquisition or investment offers until at least early next year, when Snapchat’s popularity can justify a higher valuation, the Journal said.
Facebook’s acquisition offer comes amid growing signs of waning interest among teens in the world's largest social network, something Facebook itself has acknowledged. During an earnings call last month, Facebook CFO David Ebersman reported that younger teens aren’t using the site as much as they used to.
"[W]e did see a decrease in daily users specifically among younger teens." Ebersman said. "We won't typically call out such granular data, especially when it's of questionable statistical significance given the lack of precision of our age estimates for younger users, but we wanted to share this with you now since we get a lot of questions about teens."
Facebook's bid for Venice, California-based Snapchat comes amid soaring valuations in social media companies. Twitter, which currently generates no profits, went public last week and has a market capitalization of nearly $25 billion, while Facebook is now worth more than $100 billion.
A Snapchat spokeswoman declined to comment on Facebook’s offer.
In June, Snapchat raised $60 million from investors, who valued the startup at $800 million.