Snap reportedly turned down

Facebook a second time

Professor: Oksana skorobogatova

Mohamed Abdelaal :73250

• Snap Inc. CEO Evan Spiegel famously turned down a $3 billion offer from Facebook to
buy the then two-year-old Snapchat in 2013.
• If ever he regretted that decision, he reportedly had a second chance three years later to
sell his hot ephemeral messaging app to the social media giant, according to 
The Wall Street Journal.
• Less than a year before Snap (NYSE: SNAP) went public in March 2017 at $17 per share,
Facebook (NASDAQ: FB) chief Mark Zuckerberg reportedly approached Spiegel again in
2016. Facebook COO Sheryl Sandberg also reportedly reached out to Snap’s board.
• But Spiegel rejected the idea of a deal.
• The Journal reported that a specific price was not discussed and no formal offer was
made.
• When Snap went public it did so at a valuation of $24 billion. On Friday, the stock closed
at less than $5 per share for the first time, and the company was valued at around $6.7
billion in trading on Monday.
• Morale reportedly is low at the company, which is not awarding cash bonuses for the
second year in a row.
Turning down a $3bn offer made Snapchat famous for its bold
vision. But now Facebook is catching up, leading some to predict a
‘long and painful death’
• For years Snapchat was seen as David to Facebook’s Goliath, but it looks as though the underdog
has lost its swagger.
• Shares in the messaging app’s parent company Snap fell sharply this week after one of the
investment banks that helped to take the company public downgraded its stock.
• Morgan Stanley had initially been bullish about Snap’s stock price, suggesting it would be worth
$28 per share within 12 months, but five months on, and with concerns over Instagram, it has
revised the price to just $16 – sending ripples of concern through the market.
• “Snapchat was executed over the last year with a treasure chest of self-inflicted blunders caused by
big egos and a lack of strategic focus,” said Eric Schiffer, CEO of private equity firm The
Patriarch Organization.
• In the last twelve months, Facebook has made a concerted effort to lure Snapchat’s target audience
to Instagram by cloning many of Snapchat’s unique features, including animated face-altering
filters and stories that disappear after 24 hours.
References
• https://www.bizjournals.com/losangeles/news/2018/12/24/snap-report
edly-turned-down-facebook-a-second-time.html#:~:text=Snap%20Inc.
,to%20The%20Wall%20Street%20Journal
.
• https://www.sciencedirect.com/science/article/pii/S235285322030109
7
• https://www.theguardian.com/technology/2017/jul/15/facebook-buy-s
napchat-offer-mistake
• https://blogs.ubc.ca/arendhadwal/2013/11/17/why-snapchat-made-the-
right-decision/