Snapchat, the rapidly growing photo sharing application, has recently turned down an all-cash offer from Facebook to purchase the company for $3 billion or more according to reports from The Wall Street Journal.
The reason that Snapchat was able to be so bold and reject Facebook's offer is because it is currently being courted by several other investors and potential buyers. For example, Chinese e-commerce giant Tencent Holdings had offered to lead an investment that would value the two-year-old company at $4 billion.
Snapchat CEO and co-founder Evan Spiegel, 23, will likely not be considering any acquisition offers or investment deals until early next year according to people briefed on the matter. He is reportedly holding out to allow the app's customers and number of users and messages will grow enough for the company to merit an even larger valuation when the time comes.
For those who don't know, the Snapchat app allows users to send photos, videos and text to other users that each disappear automatically after a few seconds. If someone takes a screen cap of their device while one of these images is being displayed, the sender will get a notification alerting them to that fact. The service has currently not generated any revenue but is nonetheless extremely popular amongst teens and young adults.
The Wall Street Journal points to other unprofitable companies like Twitter, which recently was valued at $25 billion after its initial public offering last week. Pinterest is another example, which recently generated $225 million from investors who valued the company, which ahs no revenue, at $3.8 billion.
Were Snapchat to take Facebook up on its offer, it would mark the largest acquisition in Facebook's history by more than doubling its current highest deal-holder, Instagram, which was bought by the social media giant for $1 billion.
