Snapchat Spurned $3 Billion Acquisition Offer from Facebook

“Snapchat, a rapidly growing messaging service, recently spurned an all-cash acquisition offer from Facebook for $3 billion or more, according to people briefed on the matter.

The offer, and rebuff, came as Snapchat is being wooed by other investors and potential acquirers. Chinese e-commerce giant Tencent Holdings had offered to lead an investment that would value two-year-old Snapchat at $4 billion.”

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  1. The 3 Billion is a mere prospective buying price. And it’s not a number that was made up all whilly-nilly. Revenue isn’t the only item that’s considered when companies make a buy-out offer. Many times companies (Facebook in this case) forecasts the potential profit of a business (Snapchat in this case). They look at the companies assets, opportunity, business environment, growth, and potential return too! They see that Snapchat has soooo much potential that they are willing to pay said amount of money. And if they’re willing to pay 3 Billion than they are anticipating making wayyyy more off of it once they acquire it. Perhaps they see a future merger, greater advertising revenues, or opening it on the stock exchange (this alone could make plenty of money, if its successful). Long story short, just because a company has no revenue does NOT mean is doesn’t have any potential, and that is why Facebook is willing to pay.

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