Snapchat’s market value continues to increase despite no revenue stream.

Around this time last year Snapchat declined a $3 billion dollar acquisition offer from Facebook. Nearly a year later, the ever-so-popular mobile app is being valuated at $10 billion. Keeping in mind that the app does not have a revenue stream, one might wonder how it can be worth such a staggering amount.

Let’s take a closer look.

Looking at Porter’s Generic Strategies, it is clear that Snapchat adheres to a focus differentiation strategy. The company has differentiated itself from other social media apps by offering a unique photo sharing experience catered to the demands of the teenage market segment. The app is fun, simple and—best of all—free of advertisements. This user-friendly experience is why the number of active users is said to be over 100 million. Companies looking to acquire Snapchat are interested in its large, loyal user base—we are the reason it is worth so much.

While many believe the app needs to start generating ad-revenue, I believe it should continue providing the user-friendly experience which is expanding their user base. Eventually, with a greater number of users, Snapchat can subtly introduce creative advertising in order to become profitable.

Image Sources: “The Truth About Snapchat”