Yahoo! Inc. (NASDAQ:YHOO) was rumored to be close to an investment in startup Snapchat, a mobile app which enables sending disappearing messages and photos. Reports suggest that Snapchat closed an investment from Yahoo! Inc. (NASDAQ:YHOO) and they keep piling up on the profits. Founder of Social Internet fund, Lou Kerner and Bloomberg’s Sarah Frier talked on Bloomberg TV about Yahoo’s investment in Snapchat.
“I think it’s (investment in Snapchap) a very good bet for Yahoo. I think, Where Yahoo is today, They reported 1% growth in revenue and the stock goes up, that shows you how well expectations are for Yahoo today and on the other end of the spectrum is Snapchat, which is one of the coolest companies out there. So by investing in Snapchat, [..] makes Yahoo cool players,” Kerner said.
Kerner added that being in competition with other tech giants who are growing significantly in mobile, Yahoo! Inc. (NASDAQ:YHOO) can learn a lot from Snapchat.
After closing the funding from Yahoo! Inc. (NASDAQ:YHOO) Snapchat is now worth $10 billion. But questions arise on the valuation of Snapchat and many people question is Snapchat really worth $10 billion? Frier mentioned that everyone in tech sector is looking for something that might take off in future. She said that Snapchat may not be work $10 billion now, but Yahoo! Inc (NASDAQ:YHOO) made investment in Snapchat hoping that the company would be worth much more than that in days to come.
Snapchat has reportedly turned down the $3 billion acquisition offer from Zuckerberg a year ago. Frier mentioned that if Zuckerberg values Snapchat $3 billion, then the Snapchat value might be much more than that.
Kerner mentioned that Yahoo! Inc. (NASDAQ:YHOO) can be very helpful for Snapchat in monetizing the Snapchat’s user base. He said that Yahoo’s core competency is in monetizing the traffic, and Snapchat has a lot of traffic to be monetized. So he thinks that Yahoo’s expertise can help Snapchat. He feels that it will be a win-win situation between the two companies.
Frier mentioned that there might be further fund raising opportunity for Snapchat. Alibaba Group Holding Ltd (NYSE:BABA) was rumored to be interested in Snapchat, but they turned their attention towards IPO. She feels that Alibaba might come back into the picture and invest in Snapchat. She feels Snapchat is the hot property which many companies are interested to invest.
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