A week ago, the Wall Street Journal reported on a story that would eclipse the buzz surrounding the Twitter IPO. Snapchat, the unique photo messaging service, would be flung into the limelight by its rejection of a $3 billion USD acquisition offer from Facebook.
Traditionally, a startup’s value usually increases as it takes in more rounds of funding, ultimately leading up to an acquisition or an initial public offering. Acquisition offers, like Facebook’s offer for Snapchat, aren’t uncommon at this stage in a startup’s life especially when considering Snapchat’s success.
But how successful is it?
CNET compiled some of the known numbers about Snapchat and choice statistics from its supposedly rejected suitor, Facebook. Here’s a list of what’s been disclosed:
- In June, Snapchat was getting about 200 million ‘snaps’ per day.
- In September, Snapchat saw 350 million ‘snaps’ per day.
- As of 19 November, Snapchat processes 400 million ‘snaps’ per day.
- Business Insider reports that Facebook currently handles 350 million photos per day.
- 88% of the 400 million ‘snaps’ were sent to one recipient.
- Instagram reports that its users upload 55 million photos per day.
Some of these one-liner statistics are impressive. As much as an order of magnitude higher uploads per day over a service as heralded as Instagram? Undoubtedly noteworthy and in a way, it adds context to Facebook’s initial offer. Three times the price for a service that doesn’t have revenue with over eight times the amount of activity sure seems like a bargain for Facebook.
However, one particular number hasn’t been addressed, disclosed, or even reasonably estimated that could drastically change Snapchat’s valuation: a count of the Daily Active Users on Snapchat.
Using what limited information exists, TechCrunch published an article that includes a chart explaining the possible estimates based on how often a user submits ‘snaps’ to the service.
Assuming that, on average, active users create 2 or more ‘snaps’ per day, the number of users on the service is estimated to be 128 million DAUs, falling behind Instagram’s self-reported number of 150 million MAUs.
Even the estimated difference of roughly 32 million users hasn’t stopped some holding companies, like Chinese giant Tencent, from valuing Snapchat at an even higher price—around $4 billion USD. With the rejection of Facebook’s offer, the realistic price tag will only go up. Snapchat’s own CEO even stated that being acquired isn’t a priority for them at the moment, which has puzzled a few personalities with some strong soapboxes.
We wonder what the breaking point is for Snapchat. Are the detractors’ point about its younger user base not necessarily being a sign of a sustainable success valid? Or is Snapchat poised to join the growing group of quirky media-sharing startups? Could Tencent’s interest in the service suggest how it might create revenue in the future?
According to Business Insider’s latest exclusive report, we know the answer to the last question is yes. Services that focus on communicating on a more personal level like Line and Path have been adding micro-transaction based sticker packs and filters for photos, for instance, to create revenue streams, and the report suggests that Snapchat is experimenting with functionality along those lines in addition to exploring advertising on the service and publicizing an API.
There will be more number crunching and estimations that will be made in the coming weeks and months as Snapchat continues to grow, but with the latest report, we can expect more information coming from Snapchat in the future. Maybe Snapchat will disclose the elusive DAU/MAU number and the company’s value can be given a proper number. Perhaps not.
Feedback has more opinions on how Snapchat is representative of a larger trend of messaging that frankly the US is behind the curve of (see also: WeChat, Line, and others). More on this and our trip to Asia soon.
One thing we are certain of is that Snapchat isn’t showing signs of breaking down anytime soon.