Recently, Snapchat has turned down Facebook 3 billion all cash-bid. Snapchat is a growing, popular photo messanging application developed by a 23 years old Stanford University student. The main reason why Facebook is interested in Snapchat is because Facebook primary revenue source is coming from mobile advertising towards teenagers; however, over the last couple months there were less teenagers using mobile Facebook app. Therefore, Facebook founders are thinking to overtake Snapchat because majority of Snapchat users are using the app via smartphones, where texting is a core function. As a result, Facebook can be more easily to target consumers and build up consumer segments while keeps Snapchat out of its rival.

Nevertheless, Snapchat believes that they worth more than 3 billion. The founder of Snapchat is waiting until early next year before considering any offers in the hope that Snapchat’s will have larger valuation by that time.

I am really amazed by Snapchat’s growth story, it is impressive on how the company expands its market so fast within 2 years. However in my opinion, if I am Snapchat’s founder, I will take Facebook’s offer at this stage. Although the company is still at the prosperity stage, but there are still lots of uncertainties in the future. Technology trend shifts so fast, it is unpredictable and no one has that sustainable competitive advantage.

Here’s a video on how people feel about this issue

Business News: Snapchat turns down $3 billion Facebook offer

Link:

Bercovici, Jeff. “Facebook Tried To Buy Snapchat For $3B In Cash.”Forbes, NOV 13, 2013. http://www.forbes.com/sites/jeffbercovici/2013/11/13/facebook-wouldve-bought-snapchat-for-3-billion-in-cash-heres-why/ .