Millennial-favorite app Snapchat has exploding numbers of users and videos, but its valuation is staying put.
The company, which operates an app to share photo and video messages that disappear in seconds, raised $175 million from Fidelity Investments, keeping the value that investments places on the company steady at $16 billion, the Wall Street Journal reported, citing a person familiar with the matter.
Entertainment companies have flocked to Snapchat to access its youth-heavy user base of more than 100 million visitors every day. People watch 8 billion videos there daily, the same number that the world’s biggest social network Facebook generates on a much larger pool of users.
Lured by that audience, companies like Disney’s ESPN, Viacom’s Comedy Central and MTV and Time Warner’s CNN use the app to share stories and videos though at a newstand-like corner called Discover. Snapchat makes money through advertising on Discover and in curated snippets called Stories.
Viacom last month signed a deal to put more of its networks’ content on Snapchat in return for acting like an agent selling ad space there.
But Snapchat’s flat valuation in the latest round of funding suggests that investors are cooling their rabid interest in tech start-ups. Last year saw an explosion of “unicorns,” technology companies privately valued at $1 billion or more. But worries that the fervor over them is overblown, combined with a sharp retraction in public stock markers, has turned a sobering eye on whether companies like Snapchat are worth their purported value.