With what is forecast to be an epic IPO set to happen within the next several weeks, China e-retail giant Alibaba has been making increasing overtures to the U.S., and is considering an investment in social media firm Snapchat.
Snapchat is growing fast. Though there are no official numbers released, researchers peg Shapchat’s usership at around 27 million, up from about 11 million a year ago, reported The Wall Street Journal. Snapchat CEO Evan Speigel estimates that users send out around 400 million “snaps”—visual messages that self delete a short time after sending—per day.
Still, there are some unusual features. The funding level under discussion during these preliminary talks would bring Snapchat’s value up to around $10 billion, a not unheard of sum in 2014 when four companies (Uber, Airnb, DropBox and Xiaomi) have already crossed that threshold. Snapchat, however, would be unique in the membership of the $10 billion club insofar as it is not currently profitable where as the other four are. It exists in the same context where Facebook snapped up What’sApp for $19 billion—a $10 billion valuation for a company that so far has not shown any ability to make money.
The deal is also interesting because it could kick off a tug-of war between Alibaba and Tencent, which is its main rival in it’s home territory. Though Alibaba is the dominant player in E-Commerce, Tencent is becoming an increasingly large and threatening presence, particularly in mobile markets where its WeChat App is 14 million users strong.
Tencent had invested in Snapchat during a previous funding round.
Alibaba agreed to buy a 60 percent stake in ChinaVision Media Group in March of 2014 despite the fact that Tencent already held an 8 percent stake in the a Hong Kong-listed television and film production company in which.
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