Then again, I didn't believe Instagram was worth $1bn when acquired either, and looking back, was wrong on that. But there's a massive disconnect between the current valuation of Snapchat, and the valuation of Instagram (when it was acquired).

a) currently no revenue, I imagine it is harder to monetize Snapchat than Facebook et al. But it is not my area of expertise so I can give them the benefit of the doubt that they can monetize it.

b) They are one lawsuit away from blowing up. I can see a future where they get hit with a child porn lawsuit or something similar. I assume they have good lawyers but it is still a rather significant risk.

I think it was a mistake not to take one of those billion dollar deals but I have been wrong before. If they can monetize their service and avoid lawsuits it could become huge.

Are they hitting at an IPO? Bluffing? Do they have billion dollar revenue stream lining up? What is their deal?

If I had stumbled onto Snapchat and Facebook offered me $3 billion, I would've grabbed the money before I could blink. I'd probably even throw them a party to thank them for being so nice.

There will be too many imitators, and this privacy problem will be solved in other ways. It will all cause Snapchat to die off. It will never realize these lofty valuations.

I think Snapchat can be profitable at some point but it would have to be a blockbuster in terms of revenue/profit to justify an 11-digit valuation.

I understand Facebook's strategy trying to stay on top of the mobile social game and remaining relevant to young users.

While I value Snapchat from Facebook's perspective, I think Snapchat itself is now in a tough spot. They're going to raise money at a valuation higher than $3b, and soon enough, the pressure will be on to start generating revenue. It's funny - people give social apps like Snapchat a hard time about not making any money, but if they tried to monetize right now, they'd look like idiots for thinking they're worth $5b or whatever, because the revenue would be peanuts in comparison. They're better off literally not making anything for the time being.

There's no way they'll ever get $3b out of that business without selling out. Maybe they think FB or someone else will be back with a better offer. I'm not sure that gamble was worth the risk.

If you think Snapchat has the same macroeconomic value to the world as Intel, Cisco, or McDonald's... Then you've lost the ability to evaluate a technology business.

I'm not sure whether to accuse this of being shill or to systematically prove how flaky the argument is. The fact is that it doesn't save photos is as much lack of a feature as it is character. The users of this app know how to take a screenshot... It's the ICQ of a different 3 years worth of teenagers that will get stomped by the next messaging app that is different from the one other people used for the past 3 years.

Snapchat is valuable because of demographics. Unfortunately those demographics grow up quickly, and the ones that replace them will rebelliously reject what preceded them just like teenagers have done for the last 50 years.

The fact that they are worth $18bn now is nothing but a prime example of the times. Mind you I know the company I'm in. VCs invest based on their bet and the reason that valuation sticks is more marketing than it is reality.

Snapchat just isn't that valuable to the world.

Snapchat is mostly a texting app. Yes - their value prop is around 'sharing moments' and they do it well. Also - they have other ancilliary offers.

And yes - they are the kings of college aged-students, and the 'cool thing' for now.

But - texting is to some extent a commodity, and 'cool brands' fade. Facebook used to be cool - then they turned into a utility. Twitter was cool, and now it's at utility stage as well.

And - do they really have the capacity to grow to 1.5 billion people? Facebook eventually had 'your parents'. Snapchat will not. Twitter has tons of regular folk. Snapchat probably will not. So there's a limit to their growth.

The question is - can Snapchat exist as a utility when the buzz dies down? Will they anchor themselves as 'the' texting platform, do they have that kind of incumbency?

Snapchat is going nowhere anytime soon, and it's entirely feasible they stay relevant for a long time.

But - the valuation is pretty dam high.

In order to justify a 17B valuation it means you have to produce 17B in profits at todays dollar value. That's a lot of money. It means 1 B in profits in the bank or back to shareholders for 17 years :).

So it's a pretty big valuation to live up to, even if they are fairly successful.

But they are definitely cashing in at exactly the right moment. They hype is at a nadir. They can't get any cooler, though they could break through to other demographics/countries/markets etc which would keep investors happy.

I recently got a new phone, and I got hooked in to all the services my friends were talking about in recent memory - instagram's dead, twitter's dead, snap chat is in flux. Not for all users, but in my group of friends these services aren't used as much. There isn't really anything keeping you from moving onto something new - your digital life isn't really that valuable. It's probably better to not read the conversations you had a year ago. The pictures are always nice, that's probably the only thing that people would care about, but with Snapchat they're gone (unless you hit save). I'm not sure what I'm getting at, but this company isn't worth $3 billion dollars.

They are only worth their Market Cap in the sense that investors literally bought-in that much because of a hypothetical upside based on scale. What happened when they tried to sell the company? The realization sets in that the company just isn't worth that much money, nor can anyone foresee how it could be in the near future.

It is a self-sustaining situation with these companies. Nobody wants to write off that big of a loss, so the valuation is sustained.

Many others are sustained on the inflated belief that the market for Ad views is adjusted for the prevelance of fraud. How many times has it been shown that click, view and user bots are used in staggering numbers. The companies making all the money have little incentive to correct this. But of course Ads clearly work in many situations. I'm just saying these bloated valuations based on ad revenue have not been adjusted for the fraud reckoning. Google struck gold because the underlying utility of the search engine is so unquestionably powerful and ubiquitously necessary to the idea of the internet that it guarantees a truly awe-inspiring user base. The value proposition of getting that service for free makes viewing Ads a second thought - it is a reasonable deal for the user.

What do people need from Snapchat that will keep them there? Sharing pictures and text messages is rapidly, and I mean rapidly, approaching a commodity service on par with landline telephones.

Anyways, the blanket optimists are subject to the same odds. If you believe everything is going to succeed, inevitably you will be correct. Everyone has confirmation bias.

Also, you may not like Snapchat, but to say it deserves to die when it both a) employs real people and b) clearly serves a market need is such a terrible thing to wish for.

For those who want to non-mobile link (I hate subdomains for mobile sites instead of using a responsive design): http://www.theverge.com/2014/8/26/6071911/snapchat-finds-inv...