Snapchat rejects $3bn Facebook buyout!

Evan Spiegel, Snapchat’s 23-year-old co-founder and chief executive, is reportedly waiting until early next year before considering any offers. Photograph: Jae C Hong/AP

Snapchat, the fast-growing messaging system, has reportedly rejected a $3bn buyout offer from Facebook.

The Wall Street Journal, citing sources close to the negotiations, said the all-cash offer came as other investors were valuing the loss making two-year-old company at over $4bn. At $3bn Snapchat would be the most expensive acquisition Facebook has ever made.

The company is believed to have over 5 million active daily users and, according to Pew research, has been downloaded by 9% of US mobile users. The service allows people to send messages and photos with an expiration date so that they are deleted from the recipient’s mobile device shortly after they are received. In September Snapchat said it was handling over 350m messages a day.

According to the Journal, Evan Spiegel, Snapchat’s 23-year-old co-founder and chief executive, is waiting until early next year before considering any offers in the hope that Snapchat’s numbers will grow enough to justify an even larger valuation.

The company’s valuation has been growing as fast as its user base. In June Snapchat raised $60m from investors that valued the company at $800m. Facebook reportedly offered $1bn for Snapchat earlier this year. Last month top tech blog All Things D reported that the company was in negotiations with China’s Tencent over an investment that would value the firm at over $3.6bn.

That news followed an announcement last month from Pinterest, the social scrapbooking company, that it had raised $225m in new funds at a price that valued the firm at $3.8bn.

Snapbook’s valuation, and those of its social media peers, will likely have soared after Twitter’s initial public offering this month, which has valued the loss making short message system at over $23bn.

The spectacular growth in the company’s valuation echoes that of Groupon, the online discount company that rejected a $6bn offer from Google before filing for an IPO. In late 2011 when the company started trading it was valued at over $16bn but soon crashed to as low as $3.7bn. It has since recovered and is now worth $6.8bn.

Source : http://www.theguardian.com/technology/2013/nov/13/snapchat-facebook-buyout-offer-rejected

Twitter Attracting Huge Demand, all set to make the most anticipated stock market debut!

Credit : Reuters

The New York Stock Exchange ran a test of Twitter’s (NYSE:TWTR) eagerly awaited market debut on Saturday with an IPO simulation.

As of now, Twitter is planning to offer 70 million shares at $17 to $20 each, according to regulatory filings. Shares will likely price Wednesday with public trading starting the following day. CEO Dick Costolo is touring the country, making stops in major U.S. cities to ignite interest in the stock. His road show is largely ceremonial given the outsized interest in what will be the hottest IPO since Facebook.

The company will trade under the "TWTR" symbol on the New York Stock Exchange, breaking from the Nasdaq market used by a large number of tech companies.

Critics believe that Twitter is playing it too safe. Current valuations imply a multiple of 9.5 times 2014 sales compared to Facebook’s current 12.9 multiple. That puts Twitter at a 27 discount to its biggest rival. It’s also priced at a 29 percent discount to LinkedIn (NASDAQ: LNKD) that trades at 13.4 times 2014 earnings.

here is considerable excitement about the IPO because Twitter is "a unique product that no one can replicate," said Michael Pachter, head of equity research at Wedbush Securities.

Pachter and his colleagues said in a research report that they expect high demand.

"We believe that the market is likely to generate appetite for more than $1 billion in stock," they said.

That is a relatively small chunk of Twitter's capital, and implies a market value between USD 9.3 billion and USD 11.1 billion -- a conservative figure compared with some of the private market trades in Twitter so far.

"The simple rules of supply and demand suggest that by limiting the supply of shares offered to the public in its IPO, Twitter will be unable to satisfy demand."

And Twitter appears to have learned a lesson from Facebook's debacle in May 2012, marked by trading glitches, accusations about secret information and a plunge in the share value for months after the IPO.

"The Facebook situation last year was a perfect storm of an overheated private market, a fully priced offering, a massive amount of shares brought to market, all compounded by an historical technical glitch," said Lou Kerner, founder of the Social Internet Fund.