Snapchat Eyeing Huge Valuation

Snapchat seeks funding that would value the company at $19 billion.
5:49 | 02/18/15

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Transcript for Snapchat Eyeing Huge Valuation
It is Wednesday February 18 in the market the New York are now open and our big number this morning. Nineteen billion dollars and that is does staggering amount of photo messaging app snapshot could be worth. According to reports snapshot as to raise 500 million dollars in its lead the round of venture capital funding offering equity value for this Los Angeles based start up. At nineteen billion dollars. Good morning everyone I'm it was bit her in new York and at nineteen billion dollars snapshot would be the third most valuable. Privately held company in the world only behind Hoover and its east Smartphone maker dal me. Two. Talk more about this let's bring in that Michael sent police senior columnist at Yahoo! finance. Good morning to you Michael and more million dollars as I noted staggering amount now why big tech investors so bullish on this company. While they're there are bullish on. In general the messaging. Area of technology for whatever reason it's now into the hottest thing for younger users 700 million daily messages as what snap Chad says. Its users do and they think that that really is what's going on here people are trying to find. The next thing that's very intensively used especially by younger people who are harder to reach by other media now than nineteen billion dollar figure. It you know these private market valuations are not. Really iron clad this is sort of an estimated and there's a lot of provisions in there that might mean that not quite what it out what it seems but it's an enormous amount of money and obviously this tremendously high hopes that this actually is some kind of a sustainable. Business down the road. And Michael as you know mobile used particularly for Smartphones. Sky rocketing so you feast he snapped chat Eddie platform be Yond messaging back and offer perhaps other services as well. Yes that seems to be the whole prince and clearly something has to follow it cannot just be. You know messages and little clips of video to disappear in ten seconds and nobody hit nobody pays fort nobody gets paid. Obviously yes there is something else and in fact after it's been experimenting. With seminary delivering media content that's produced by others their party media content which does contains imagines what the advertising revenue. So DA do here is that once you have so many people in the habit of looking at this app constantly. Then you Dan can deliver something else have value due to advertisers. Which is mostly. There I've also yes it does seem as if this is seen as kind of a Trojan horse spirit through which you can deliver. Lots of other types of content and advertising messages. Add founder and in Spiegel the rejection as you know in 2013. FaceBook offered three billion dollars. Right now it's not looking so bad anymore and is high valuation perhaps also a bet on the CEO and now. Well yes just to certainly to some degree mean obviously there are other people who have tried to crack this in and you know when he turned down that money from FaceBook really the the public opinion on now was that you've really made a blunder that he should have taken the money and run he was considered to be maybe even sort of non serious and in really didn't have much of a business behind him but clearly this product at least has flowered whether it was all his doing a kind of right place right time is hard to know. Action mentioned you know FaceBook did by what's happened northern messaging app. For something like twelve billion dollars that value is probably a little bit higher than the out in the private market value of snap jets are. There is kind of some general attention here on the talent that it takes. You like to get these messaging apps going it's hard to say you know for its gonna be one vs the other or if it's all going to be you know whatever speed goes vision is is going to be the thing that this company. Ultimately chose but he has some very high quality backers people who know. This business and I do think that it's definitely a pretty big vote of confidence from I should point out you know. FaceBook shares are up by about near the triple since 2013 is also the entire space has seen tremendous increase in die. Also from. What sap as you mentioned to use as snap chat to FaceBook great times to be. Involved with tech startups now and what the NASDAQ nearing all time died. Is Wall Street and the Silicon Valley seeing that makings of another tech bubble possibly. You know impossible to say it's it's hard to make a case that the public markets the NASDAQ is really in a similar type bubble too or was fifteen years ago. The stocks just are not that expensive they have incredibly strong balance sheets and lots of cash and most of them are very high. Profit margins and I do think that tech is a sectors probably getting to be a little bit. Two popular as the favorite but it's nothing like what we saw. In terms of the NASDAQ technology bubble which is really distorted values for businesses that barely even existed at the time now in terms of Silicon Valley getting caught up in the venture capital boom. There's some argument to be made there that the private market is where a lot of the excesses are what people are putting very aggressive valuations on their me if you put a private market value of 9020 billion dollars on something like snapped Jack are twice that for over. It's really it seems as if most of the value. Of that business has been recognized for forty becomes public. So it seems like a lot of that good news is being front loaded. In the venture capital world and it's not so much about the public markets getting caught up in you know over excitement or media. Nineteen billion dollars not bad once again Michael and toll from Yahoo! finance think it's still much for joining us this morning. And you of course can keep up with the latest headlines right here on abcnews.com. You've been watching the big number. Analysts better in New York.

This transcript has been automatically generated and may not be 100% accurate.

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