Social media firm Snapchat has managed to raise $175 million from Finality Investments, one of the company's most prominent investors. While the amount in itself is quite impressive, Snapchat's valuation at $16 billion is the exact same amount as the company's valuation from the previous year, according to a source who has opted to remain anonymous.
Fidelity purchased shares of the popular social media firm back in February at $30.72 a share, which is the exact same price it paid for the company's stocks March 2015, despite Fidelity marking down Snapchat's price per share during the fourth quarter of 2015 to just $25.75.
While the valuation of the company at $16 billion remains very formidable, it is quite notable that the firm has stagnated to some degree. After all, experiencing a "flat round," wherein a company experiences a stagnation in valuation despite a consistent stream of revenue, is indicative of investors' increased cautiousness in the global social media market.
With Snapchat experiencing a flat round this year, some analysts have perceived that the popular social media platform probably grew too fast and that investors are finally beginning to significantly modify their expectations.
Nevertheless, Snapchat's performance during the past year has been impressive indeed, with the company becoming the sixth most highly-valued venture-backed firm in the world. For a company with a business revenue model that is as basic as Snapchat's, such figures are very notable.
Then again, it is quite evident that Snapchat's results in this year's valuation pale in comparison with that of the company's performance on March 2015. Last year, then the company reached a valuation of $16 billion; the figures represented a 60-percent surge from its previous funding round in December 2014.
One of the reasons for this year's valuation is possibly Snapchat's relatively limited source of revenue. After all, the ads featured in the social network is the only real source of income for the company. Recently, however, Snapchat has stepped up its efforts to make itself more profitable, finalizing a deal with Viacom that gives the media company the ability to exclusively show its ads on the social media platform.
With 100 million active users daily, Snapchat is indeed one of the biggest players in the social media world. The company just needs to find its stride and make itself even more profitable.
