Snapchat has been marked down by one of its most high-profile investors, raising further questions about the soaring valuations of private technology companies. Fidelity, the only fund manager to have invested in the four-year-old company, wrote down the value of its stake by 25 per cent in the third quarter, according to data from investment research firm Morningstar. It had valued each share at $30.72 at the end of June, but dropped the valuation to $22.91 by the end of September.
Other Snapchat investors include Benchmark and Kleiner Perkins, the Silicon Valley venture capital firms, as well as tech companies Alibaba, Tencent and Yahoo. At $15 billion, Snapchat is the fourth most highly valued private US tech start-up, behind ride-hailing app Uber, Airbnb, an accommodation rental site, and data analytics company Palantir.
The markdown highlights a debate in Silicon Valley about the high valuations assigned to private companies and follows a string of initial public offerings of technology groups that have been priced lower than their last private fundraising rounds. It is unclear why Fidelity marked down its stake but Snapchat is still searching for a sustainable revenue model.
The four-year-old messaging app has 100 million daily active users who watch billions of videos on the site each day. But it does not appear to have convinced marketers that its experimental advertising formats – such as the recent launch of sponsored “lenses” that enable users to add special effects to their posts on the site – will pay off.
