Investor worries regarding the growing number of potentially overfunded tech companiesseemed to have died down in recent months, but new information surrounding popular app Snapchat could renew talk of a tech bubble.
Facebook offered $1 billion in a bid to acquire photo-sharing app Snapchat, according to The Wall Street Journal, citing sources briefed on the matter. Snapchat CEO Evan Spiegel reportedly turned down the offer, although sources did not specify when the offer took place.
That $1 billion number may sound familiar because it’s exactly what Facebook paid to acquire another photo-sharing app, Instagram, just last year. The deal was roundly lauded as a move that could help bolster Facebook’s staying power, as it struggles to hold onto users who are growing tired of blogging about their lives, instead preferring to share photos via mobile apps.
acquiring Snapchat — which claims that its users send 350 million photo messages per day — would help Facebook corner the market on popular photo-sharing apps, as well as help the social network attract a younger demographic. The latter issue is particularly important, assome reports say younger users are beginning to lose interest in Facebook.
Last year, Facebook launched Poke, an app that many describe as a Snapchat clone because it allows users to send photos that disappear after a short amount of time.
If reports of the $1 billion offer from Facebook are confirmed, it would place Snapchat in the same category as startups such as Instagram and Google-acquired Waze, which were purchased despite showing no significant revenue.
For Snapchat naysayers, it’s useful to remember that not long ago, early large valuations placed on Twitter — once viewed as a frivolous messaging platform — were also seen as a product of a tech bubble. Today, Twitter is considered an essential part of the media landscape and has filed an IPO that values the company at around $11 billion.
Given that recent history, Snapchat’s current valuation may not be as outlandish as some may think.
Facebook and Snapchat did not immediately respond to requests for comment.