Snapchat turns down buyout offer from Facebook for $3 billion

Snapchat might be too popular for Facebook, as international investors eye the rising social media company.
Posted By Sonali Basak  |  Nov. 13, 2013 at 2:43 PM
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Nov. 13 (UPI) -- Social media messaging company Snapchat is rising in popularity with users -- and potential investors -- worldwide. Today, it was announced that the company declined a $3 billion cash buyout bid from Facebook.

Facebook initially offered $1 billion for the company, but Snapchat is gaining steam internationally, and might be valued at much more. Chinese e-commerce giant Tencent Holdings, which holds stakes in a number of apps and messaging services, offered a lead investment of $200 million for a stake of the company valued at $4 billion.

Snapchat CEO Evan Spiegal, 23 years old, has said he's waiting until next year to sell the company, but some think he might not sell it at all.

Snapchat has close to 26 million users in the U.S., and more than 100 million total users. More than 350 million messages are sent daily through the service, up from 200 million in June.

Snapchat has raised $73 million from investors to date. And its most recent valuation in June was at $800 million.

But Snapchat doesn't turn a profit, and many investors doubt that social media platforms are able to turn significant profits. Twitter, while valued at $25 billion, has yet to turn a profit.

The valuations of social media companies seem to be rising. Facebook bought Instagram for $1 billion, and Yahoo! bought Tumblr for $1 billion.

But Facebook is losing steam among younger audiences and teenagers -- a strong demographic for Snapchat. Facebook has tried, unsuccessfully, to create a similar app.

[Wall Street Journal] [The Atlantic Wire] [USA Today]

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