Well, the numbers keep getting bigger and bigger. After raising another $650 million in equity, Snapchat is now valued at $16 billion. Yes, that is billion with a “b”. I won’t get into the numbers, but let’s just say Wall Street feels as if Snapchat is worth quite a bit of money. For a frame of reference, Facebook tried to buy Snapchat for $3 billion in cash just 18 months ago. Google offered $4 billion and Evan Spiegel turned it down. Now we know why.
I am certain many people are asking, “How does Snapchat make money?” Well, eyeballs. The more eyeballs that are on this app the more advertisers are willing to pay for ad spots. Recently, Snapchat announced they were going to charge $0.02 per view on the Discover tab. With some Snapchat Stories getting upwards of 40 million views you can be rest assured Snapchat is able to pay a few bills.
Snapchat is also using their “Stories” feature to strategically display ads to upcoming movies and events. Coke and other major brands have dropped ads within these stories as well. I can assure you that Snapchat will continue to increase in value as more and more people use the app. There are no signs of fatigue either as Snapchat users are glued to the app day and night. If you go to any event with high school or college kids you will notice they are looking at Snapchat every single time they pick up their iPhone or Android phone.
So, do you think Snapchat is worth $16 billion? Would you buy stock in Snapchat when it IPO’s? Is Snapchat going to end up being the biggest player in social media, even bigger than Facebook and Twitter?