Has Snapchat Earned the $19 Billion Price Tag?

Snapchat is now rumored to be worth $19 billion

Feb 18, 2015 at 2:29 PM
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It seems like every day you hear about a new startup, another breakthrough app or emerging software company. And it seems like every day investors are pouring millions upon millions upon millions of dollars into these ideas. What's Uber worth now, $40 billion? Rival Lyft trails with a meager $2 billion price tag -- shameful! I'm not saying Uber isn't a great company; on the contrary, I love it. You're telling me I can listen to my own T-Swift soundtrack on the way to the bar via Bluetooth? Fantastic! Still, though: $40 billion!?

I just look at some of these startups and question the price tags being associated with them, which, I guess, is the point. It's merely investors guessing, throwing a dart at a blank wall and hoping the bull's eye gets drawn around it. Just today, in fact, a report surfaced saying Snapchat is seeking funding at a $19 billion valuation.

Too much? Actually, I don't think so, not for Snapchat. Snapchat has been a standout, in my opinion. While other tech companies are seemingly struggling to find their identity, Snapchat has continually made sensible strides to improve its product -- including one that I don't think has been given the recognition it deserves. That would be Snapcash, which allows Snapchatters (?) to send each other money by simply typing the amount in a message and sending it. Both users just need to enter their debit card information. Some may cite security concerns with this model, but who actually worries about their sensitive information being stolen these days? Psh.

Snapchat's Snapcash

Snapcash is a revolutionary product, something I foresee gaining popularity quickly as more people become accustomed to using their mobile devices for shopping, banking, or however else people handle money these days. But let's pump the brakes on Snapcash for a second and discuss something else Snapchat added recently: Discover.

Discover is essentially a media hub where Snapchatters (is that what they're called? Someone help) can view videos and news from different media outlets, such as CNN and ESPN. This is a useful and entertaining way for people to get briefed on all the day's news. Oh, and how about Snapchat has its own "channel" on there. From what I've seen, it's included some original content, as well as some insider "newsy" stuff. For example, Snapchat had its own reporter at the Grammys. It appears Snapchat is becoming a full-on entertainment provider.

Snapchat's Discover

You can imagine how Snapchat could interlace Snapcash with Discover -- or with the ads it'll eventually put on the app. Of course, users have already seen some ads for new movies on the platform, but you can guarantee there'll be more where that came from. I could see Snapchat adding in a "Buy Now" button that users can click, then simply hand some Snapcash over and get the product they want. There are many directions Snapchat could go with this.

Snapchat has also been giving people insider access to real-time events. I already mentioned the Grammys, but Snapchat has also had celebrities use its product on the recent Saturday Night Live reunion, and it also uploads videos of users at major social gatherings. For example, Snapchat currently has "stories" for New York Fashion Week and Mardi Gras.

Another angle to consider is that, while many companies strive to make their businesses work in the growing world of mobile, Snapchat is already there. That's where it began; that's where it lives. It has a head start on the competition. What it comes down to is this: Snapchat's platform offers several ways for the company to monetize the product. If it can continue to evolve in the way it has been, I like Snapchat's chances of making a major splash on Wall Street, when -- not if -- it goes public.

 

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