Breakingviews

Snapchat’s valuation soars on tech-land pixie dust

August 27, 2014

The disappearing-photo business has turned 100 mln users, chat-service demand and the $20 mln sale of a tiny equity stake into a $10 bln price tag. Trouble is, the company lacks revenue – and none is in sight. It’s another example of technology dreams trumping real economics.

Valuing Tencent’s chat app remains an act of faith

March 20, 2014

The Chinese web giant has finally shed some light on its popular messaging platform. Revenue figures show WeChat is morphing from an app into a business. But sparse details on costs and regulatory risks make future earnings anyone’s guess. Valuations are based largely on hope.

Candy Crush maker picks $7.6 bln IPO from thin air

March 12, 2014

King Digital uses creative metrics like MGABPPU to justify its whopping valuation. But there’s no way to calculate what an enterprise is worth when its profit can skyrocket 70-fold one year and could collapse the next. Rival Zynga’s IPO flub serves as an apposite warning.

Snapchat’s valuation built on false assumption

June 25, 2013

Mistakes last forever on the Internet. That’s why everyone from teenagers to traders have latched onto Snapchat’s app, which can send self-deleting pictures and videos. Problem is, it’s not foolproof – and the perception that it is could lead to even more embarrassing mistakes.