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Yahoo set to invest in Snapchat with a $10 billion valuation

Image via USA Today

Far from its search engine roots, Yahoo is taking even more steps in the near future to expand its portfolio of investments: according to unnamed sources speaking with the Wall Street Journal, the company may soon invest upwards of $20 million in Snapchat as part of a larger fundraising round which values the service at $10 billion.

Snapchat has seen its fair share of buyout offers over the years, including a $3 billion takeover bid from Facebook and a similarly large offer from Alibaba -- all of which it has turned down. Despite this, the messaging service still lacks any sort of tangible revenue stream, so its only source of income for continued development stems from investors like Yahoo and various venture capital firms.

Snapchat exists at the forefront of a growing sector of "disappearing text message" services, with massive companies like Facebook and Microsoft rolling out their own services to compete, so a valuation of this size -- while still uncommon for a company with no revenue -- isn't entirely ill-conceived.

Recent reports also suggest that Snapchat may become ad-supported in the future -- something which could net the service considerable revenues thanks to its more than 100 million active users. And with Yahoo as a major investor, there may be a mutually beneficial partnership which would allow Yahoo to compete on a level playing field with its largest competitor, Google, and which would allow Snapchat to expand its influence in the instant messaging market.

Source: WSJ via BBC

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