Yahoo looks to lower the heat with a new investment Snapchat
Guess who is thinking to invest in Snapchat? According to the Wall Street Journal it is Yahoo. The deal discussions come right after Alibaba’s IPO, which left share-holder Yahoo Rolling in the dollars - with about $9.4 billion of them— along 383 million shares Yahoo shouldn’t even be thinking of selling in the near future.
Ali Baba’s public offering did more than gain investor trust and company worth – it also revealed what investors think Yahoo’s hub business is worth — roughly $4 billion.
The offering also ended Marissa Mayer’s fun time as CEO and created a chain reaction of criticism about her approach to running Yahoo. Analysts questioned Mayer’s minor acquisition strategy of content companies like Tumblr, which have not brought in much revenue or elevated Yahoo’s brand in the tech world.
A possible Snapchat investment- an investment that is rumored to value the company at $10 billion, Yahoo would be making a risky bet. The ghost-sharing app Snapchat hasn’t implemented a strong plan for making Money just yet, but it’s exploring new ways of getting attention from advertisers.
Snapchat’s popularity, particularly with the young crowd, is something to brag about but is not a sure success in terms of future monetization. With Yahoo’s core business on the brink, and its content buy-outs a failure so far, a bold bet on a more popular app might be worth it.
If what the reports say are true, Yahoo will be joining a fellow withering star, Kleiner Perkins Caufield & Byers, in Snapchat’s next round. Just like Yahoo, Kleiner Perkins is making the attempt to win back some of its glory in the eyes of the public. Lately it has struggled to predict the biggest hits, missing the likes of Whatsapp and Facebook, and not doing enough make their investments like the Segway and Fisker a success.
A failure could further harm their brands but a well placed bet on Snapchat could be the boost that they both really need to own shining stars once again.