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Emerging triumphant after the AliBaba IPO, Yahoo reportedly intends to direct some of its new earnings toward Snapchat.
The Internet heavyweight, which gained $5 billion through its AliBaba stake, reportedly plans to invest $20 million in the Venice-based startup. According to The Wall Street Journal, this would value Snapchat at $10 billion.
In the face of monopolizing competitors like Facebook and Google, Yahoo may be seeking renovation in terms of public image and social utility. Since Marissa Mayer assumed the role of CEO in 2012, the company has acquired image-based blog site Tumblr and the UK-founded news aggregator Summly. A partnership with a photo messaging service, some speculate, could bolster the company’s ability to distribute content, ads, and apps through mobile platforms and its relevance in the world of social media. To Mayer, who deems Yahoo "a digital content company at its core," a Snapchat investment could seem a logical next step.
Concerns over Snapchat's profitability have surfaced, however. While it has experienced substantial and rapid user growth and has promising venture backing, Snapchat is a free service that doesn’t display ads, thus generating no revenue. Also, if the app’s privacy claims are true, every message sent through it is destroyed after a few seconds, which precludes long-term availability of user data for marketing efforts.
Snapchat boasts a history of interest from major tech companies. In November of last year, the company rejected a $3 billion acquisition offer from Facebook, opting to wait to accept acquisition and investment offers until its valuation increased.
Founded in 2011 by Evan Spiegel and Bobby Murphy, Snapchat now employs 10 and has raised over $160 million in venture capital.
This news arrives less than a week after Yahoo bought messaging app MessageMe, then shut it down shortly after, suggesting that the corporation may be laying the foundation for its own plans in the mobile messaging space.
