The lure of Snapchat: Yahoo poised to invest 'millions'

Yahoo is reportedly in talks to invest millions of dollars in Snapchat, the time-restricted photo messaging app, thought to have 100 million monthly users and zero revenue.

Snapchat: set to take $20m Yahoo investment
Snapchat: set to take $20m Yahoo investment

The company is reportedly close to investing in a round that would give Snapchat a value of $10bn, one of the highest valuations in history for a company that makes no money.

Snapchat allows users to send messages that self-delete a few seconds after being seen. The start-up is apparently considering bringing brands into the fold, trialling disappearing news articles and ads.

It is believed that Yahoo will use some of the cash made from the sale of its stake in Alibaba. The Chinese e-commerce giant went public last month, giving Yahoo $9bn before taxes. Yahoo said it would give half that cash to shareholders, but has not laid out its plans for the other half.

Putting money in Snapchat could give Yahoo a much-needed shot in the arm, with the company's core business struggling.

Despite buying into Tumblr, another platform popular with a young audience, the $1.1bn acquisition has yet to deliver a boost to revenues. That's despite the fact that multiple brands make use of Tumblr, including Calvin Klein, Coca-Cola and Disney.

Earlier this year, Facebook bought messaging app WhatsApp for $19bn but ruled out any possibility of ads.

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