Wednesday, November 13, 2013

FB: $3bil offer for Snapchat?!?

This is like a little kid wanting every new toy he sees no matter how much it costs; yes, this is the great Facebook (FB) management team led by Zuckerberg. According to the Wall Street Journal, FB offered $3bil for Snapchat, and it was rejected, for now. 

Yes, this shows that FB is desperately trying to minimize defection of teenagers which may be impacting the Company's ability to further monetize its huge audience via ads.  This is something we touched on in our last FB post. Of course the stock reacted positively to this news. Whether such reaction was due to investors saying "thank Goodness Zuckerberg didn't throw away $3bil on a company with NO REVENUES" or was due to investors saying "thank Goodness FB is at least trying to address loss of teenage users", remains to be seen. Lastly, we must remind everyone that FB is still in its early stages in monetizing Instagram for which it paid approx. $1bil.  Maybe Zuckerberg and his crew should wait to see the ROI on Instagram first, before tripling down on a risky bet.  But seeing everything flying so high, Zuckerberg and his team may be thinking the same as many investors: gotta pay whatever to get into this; the market and everything else keep going higher; can't miss the opportunities. 

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