From DailyTech: The last two years has brought seemingly spectacular success for mobile messaging service Snapchat. It scorned bids from $3B and $4B USD, respectively, from Facebook, Inc. (FB) and Google Inc. (GOOG). And while it weathered a data loss storm in early 2014, by late in the year users seemed to have forgiven and forgotten (aptly the premise of the service itself). Now it's raising venture capital at a valuation of a cool $15B USD. Depending on how the financing round -- launched in March of this year -- goes, Snapchat may wind up valued at anywhere from $15-19B USD.
That dreamlike vision is dealt a serious blow, however by the financial realities of Snapchat's balance sheet. While Snapchat's lack of revenue was long the subject of insinuation and innuendo, we never had anything close to definitive numbers. But now thanks to a whale of a leak obtained by Gawker, for the first time Snapchat's purported balance sheet is on display.
It's pretty ugly.
To understand these numbers, first note that last year Snapchat at long last began advertising last year. Analysts had long predicted this move as the messaging service's pathway to monetization noting Facebook and Twitter, Inc. (TWTR) followed similar paths to profitability. Speculation dating back to 2013 suggested that Snapcht could in theory pull in a couple of hundred million dollars in profit or more per year if it turned the ad crank. With its large base of millions of active users, many have bought that as plausible.
But the results of Snapchat's first year of advertising are far less impressive. According to the leaked balance sheet it made only $3.1M USD in the first 11 months of the year. However, a major caveat is that earnings comes from only the first month and a half of advertising, as ads launched on Snapchat in mid-October 2014.
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