After reading about Joban Sandhu’s blog post about Snapchat’s high valuation, I can understand why many people may value the company at $10 billion. Although the company may not have a revenue stream at the moment, they do have a large user base which can eventually be turned into profits. I agree with Joban when he states that “Snapchat adheres to a focus differentiation strategy” since it is a unique product that targets a specific market. However, I do not agree with Joban’s thought on how he can see why the “owners want to continue providing the user-friendly experience” without generating revenue at the moment. I believe that the company will need to be able to produce a profit soon in order to maintain its high valuation. There is no proof that Snapchat could even generate a large enough profit to make their high valuation seen realistic. The popularity of instant picture sharing could just be a fad and the number of daily users could diminish just as quickly as it grew. If Snapchat were to somehow integrate advertisements or sell user information to advertisers, I can see how the company can be successful and make some money, at least in the short term.
Sources:
https://blogs.ubc.ca/jobansandhu/2014/10/04/why-is-snapchat-valuated-so-highly/
Image:
Snapchat-Logo.jpg. Slash Gear. Web. 4 Oct. 2014. <http://www.slashgear.com/snapchat-settles-ftc-suit-admits-guilt-about-security-issues-08328209/>.