Alibaba plans to invest $200 million in Snapchat, the social media service for photos that disappear in seconds. Reports say the new funding brings Snapchat’s valuation to a whopping $15 billion.
Snapchat’s $15 billion valuation dwarfs the $3 billion figure Facebook offered to buy the service for just two years ago. It is said to be looking for $500 million in funds from private investors.
It takes Snapchat into the ranks of startups with multibillion-dollar valuations. Only Uber, the mobile car-booking app, and Xiaomi Corp, the Chinese smartphone maker, is valued higher – though they are valued quite a bit higher at $45 billion for Xiaomi and $40 billion for Uber.
Alibaba first looked at a Snapchat investment in September as part of a drive to expand beyond its core e-commerce business. It has recently ploughed cash into a Chinese taxi app, the Singapore postal service and a Chinese football club, and is considering a stake in an Indian online marketplace called Snapdeal, according to the Wall Street Journal.
By the time Snapchat stake was reported, Alibaba had already announced another investment in a Chinese web-enabled car. Alibaba said is said to be developing in-car digital entertainment, maps and financial data for the vehicle.
Snapchat’s 100 million users post more than 700 million photos a day, the company said last year. Its creators Evan Spiegel and Bobby Murphy are two of the world’s youngest billionaires, with a net worth of $1.5 billion each.
Snapchat, meanwhile, is still struggling to generate revenue after rebranding itself as a social sharing service following bad press for teen sexting. Snapchat photos, which disappear within seconds of being viewed, can now be added to public galleries to create stories of the kind the Chinese authorities usually target. Indeed, Snapchat is still banned in China.
A stake in Snapchat would take Alibaba’s total equity investments over the past 12 months to $6.3 billion from 26 deals, according to Bloomberg.Reuse content