The 23-year-old co-founder of the popular photo-sharing app Snapchat has reportedly turned down a massive buyout bid from Facebook.
The Wall Street Journal reports that the all-cash bid was for close to $3 billion. This is the second time Snapchat has rebuffed Facebook. The first time, the social media network offered $1 billion.
Snapchat is a
smartphone app that lets users send photos and videos that disappear
within 10 seconds of being viewed. The company does not report user
data, other that saying that, as of September, more than 350 million
"snaps" are being sent each day.
The latest bid is nearly three times what Facebook paid for Instagram in 2012. This would have been Facebook's largest acquisition.
The majority of Snapchat's users are teens and young adults -- the same demographic that's starting to lose interest in Facebook, a growing concern for the world's largest social network.
Snapchat, a two-year-old startup, has no revenue and no sales model. The WSJ reports that the company will likely not consider a buyout or take on a major investor until at least next year, as Speigel hopes to receive higher bids.Other non-profitable startups have taken a similar risk and seen it pay off. Since going public on Nov. 7, Twitter is now valued at more than $25 billion. That's despite the $64.6 million in losses that the company reported in its IPO filing.
"The market is signaling that it is very receptive again to these young, high-growth social media Internet companies," Tim Loughran, finance professor at the University of Notre Dame in Indiana, told the Associated Press, adding that Twitter's success indicates that profitability is irrelevant.
But for every success, there are dozens of failures. Digg was once valued at $160 million. Last year, founder Kevin Rose sold the company for about $500,000. Then there was the entire dot-com bust of the late 1990s, when one company after the next shot down multi-million-dollar offers only to end up going under.
After two rebuffs, it seems likely that Facebook's offers will soon disappear -- just like the "snaps" that Spiegel invented. Whether other bidders will come calling remains to be seen.