Bloomberg: Alibaba investing $200M in Snapchat at $15B valuation

• A month after reporting Snapchat is seeking a valuation as high as $19B in a new funding round, Bloomberg reports Alibaba (NYSE:BABA) plans to pour $200M into the ephemeral messaging platform at a $15B valuation through an investment that would be outside of the funding round.
• Snapchat, whose user base skews heavily towards millennials, was valued at just ~$10B in a $485.6M funding round that took place a couple months ago. Its monthly active user (MAU) count is believed to be around 200M.
• Meanwhile, the WSJ has reported Alibaba is in talks to invest in major Indian online marketplace Snapdeal; no word on the investment size. SoftBank, which owns a big chunk of Alibaba itself, invested $627M last year in Snapdeal, which (along with Flipkart) is one of the two biggest players in an Indian e-commerce market forecast by Morgan Stanley to grow to over $100B in 2020 from just $3B in 2013.
• Alibaba, which had $21.1B in cash at the end of 2014 thanks to its massive IPO, has been making strategic investments at a heady pace. Recent deals: Meizu, Peel, SingPost, Kabam, Youku, Intime, Beijing Enlight Media.

Comments

[Investing 101]

BABA good to go for the long term.

http://on.mktw.net/1Cr...

[vikramnjnjjdjnd]

Wait. Be patient. The storm will pass. The spring will come.

Stay the course.

[sonicthehedgefk]

Why is the stock not below 80 with all these concerns?

[Investing 101]

One simple reason, the stock is going higher long term. Estimated earnings for FY2016 are approximately $2.87. With a estimated growth rate of 30% over next 5 years, this gives an estimated EPS of $8.19 for FY2020. Slap a conservative PE ratio of 30 on those FY2020 earnings and you're looking at a stock price of $245. A return slightly above 200% or appox. 41%/year.

[Vidal Med]

Baba major gamble in snapchat. Chinese GOVT is not amused. lookout below.

[carlomiami]

There is very good chance this one goes up on lock up, specially with all this good news and the possibility of going back to $120 soon

[Big_Bear_Mega_Bull]

BABA ipo lockup expire on 18th mar. releasing 435mil stocks.. so go north or go south?

[Nicholas Krapels]

You've got to be kidding me, 101!

"Intentionally not trying to crossover"... This is just plain wrong.

Tencent has acquired 15% of BABA's #1 rival JD.

BIDU has invested in Uber as a direct counter to Tencent/Ali's dominant Didi/Kuaiche taxi hailing apps.

BABA has already invested in messaging platform Tango as a means to address the empire's most glaring lack. Prior to the IPO, it bought AutoNavi as a means to chip away at Baidu Maps. And it constantly invests in logistics platforms to address the one area where JD has a distinct advantage.

No, BAT (Baidu, Alibaba, Tencent) are not NOT competing. They are increasingly crossing over into each other's respective territories.

The only difference I see is that Jack Ma is now playing the game on an international level, while his two main competitors are still incredibly Sino-centric.

[Investing 101]

LowBeta....you couldn't be more wrong! One company competing with another company who has a minority shareholder is still only two companies. This is significantly different than three distinct companies going head to head to head. Go ask ATT whether it would prefer competing head to head to head with Verizon and T-Mobile or only with Verizon who has T-Mobile as a minority shareholder. Minority shareholders are just that... minor. This is not to suggest that they can't influence the outcome because they can, but not in the same way three players competing directly with each other can. And isn't this what the Chinese government is hoping will happen... limit competition by limiting the number of direct competitors. If you still don't believe me, go ask Jeff Bezos whose company recently quit competing head to head with BABA and JD and now sells AMZN products through BABA's T-Mall website.

[Investing 101]

You can add Tencent to another company that has capitulated. Tencent is opening up a store on BABA's T-mall website according to Tech in Asia news (3/16/15). What were you saying about Tencent trying to compete head to head with BABA?

[Investing 101]

With regards to the earlier comment about Weixin, Weixin or the act of "Weixining" is an interesting social/e-commerce phenomenon in China. Users not only access it for social messaging, but also to sell items (i.e. clothing, electronics) to other so called "friends" subverting Chinese commerce laws. Extremely popular and reduces the risk of buying counterfeit goods. Not sure it will ever become a major ecommerce player and I'm not sure BABA needs to entering into Tencent's area of expertise (social apps). The reason I say this is because the major Chinese internet players (BABA, BIDU,TENCENT) have each seemed to carve out their own niches. These three seem to be intentionally not trying to crossover into the others area of control. BABA controls ecommerce, BIDU controls search and Tencent dominates social media. I assume the Chinese government has a hand in this, but as investors don't we all want to own monopolies or oligarchs. The lower number of competitors allows for higher prices and larger profits. Leave it to the Communists to revive "old school" capitalism that existed in the USA circa late 1800's. J.P Morgan, Pierre DuPont, Carnegie and Rockefeller would all be so proud.

[Cash rules everthing around me]

,

[Memories from yesterday]

Wrong. Zuck offered $3B and Snapchat didn't even counter. So yes, Baba getting in at $15B valuation for Snapchat sure makes for a great short story for FB

[Blake Meneley]

Where do they come up with these insane valuations? I'll stick to companies that have earnings.

[Brian Nichols]

If my comment offended anyone then I apologize. It was a response to the valuation of Snapchat, not anyone's opinion.

[User 618746]

yes this is the way to do it.

[Nicholas Krapels]

Alibaba desperately needs something to compete with Weixin. A proper chat app is the missing piece to the BABA-dom.

For all you old goats out there, Snapchat is what the kiddies use! This just another investment where Jack Ma is skating to where the puck is going to be, rather than where it is!

Interestingly, Marissa Mayer just scored a quick 50% on Yahoo's $20m investment in The Ghost from a few months back.

[Manitobatex]

Yup Marissa is making up for firing a multi million $ contracted employee.
Sadly that BABA investment wasn't her doing but she will take the credit.
Zuck was looking at $9B for Snapchat purchase by the way.

[Deja Vu]

Zuck assumed he could just buy up any and all competition with Federal Bank of Facebook Stock. He's finding out that, unlike the Sainted Fed of Yellen & Bernanke, there's a limit to the number he can issue.

The use of phone numbers provides a universal network for any app makers to use for accounts without having to entice users to create a specific username.

Twitter, Snapchat, Google, Facebook and its own cannibal Instagram (& potentially whatsapp), not to mention one zillion others, online ad prices, which are high for FB, have no where to go but down....

[Kingstontrader]

5 years from now, the pundits will all be saying what a bargain, much like when Google bought YouTube for what at the time was thought to be a colossal waste of money

[DrewMcVay]

YouTube and SnapChat are extremely different. SnapChat isn't innovative in any way, where as Youtube you're streaming content, which wasn't so centered and accessible before. YouTube has an easy way to monetize, SnapChat doesn't. The moment YouTube put up adds, people still watched videos. The moment SnapChat puts up advertisements, people will just use their phone like they always have to send pictures to their friends....

I'm under the impression that a lot of these social media/app companies aren't even used by investors that throw millions of dollars at them, there's going to be some people that get burned in the end, and it's not the social media/app companies.

[GameKing13]

Agreed that's why I sold my shares and moved the money into Apple. Safer bet

[Investing 101]

I thought the idea was to buy low and sell high. Isn't APPL near an all time high. What is going to push the stock higher over the next 18 months? Disappointing Apple watch renenues? Stalled Apple Pay usage? Diminishing iphone 6 sales? Deteriorating ipad sales? I have no problem with taking profits in one stock and buying another, but not for a stock like APPL which has had its run. Next, you will be telling me you think the airline stocks are a great bet going forward. They too were recently at all time highs. Tell me you like financials or energy, or something besides APPL! Institutinal traders love selling out to you guys at tops.

[Investing 101]

Sorry... revenues* and Institutional* I do okay at the investing thing it's that darn spell checking I need to work on

[Investing 101]

I am sure Drew you must be right. People like Jack Ma (net worth $25 billion), what does he know about ecommerce and monetization potential. Also, what does Mark Zuckerberg (net worth $28 billion) who offered to buy Snapchat several years ago for $2 billion know about social media potential. Thanks for offering your valuation on Snapchat.

[joeliebig]

Ma sure knows how to screw shareholders, though.

[Zack_+]

That is for sure

[andypochta1]

They know nothing just like investors who value these dot coms at 200+ Billion dollars each. Both will crash. You will lose 98% of your money in Baba and 90% in Facebook.

[DrewMcVay]

100% ownership of Snapchat isn't worth $15million let alone $15billion.

[Anyoption]

This is a whole new market. The way we valued companies before doesn't seem to apply anymore--so bizarre

[DrewMcVay]

Agreed.

If someone asked me to invest in something that wasn't making money, and there was no strategy in place to make money, therefore unlikely to ever make money; I would say they are crazy.

This is a really poor investment by Alibaba. I understand that they are investing in a wide array of things to capture the gains and the losses and eventually end out ahead, but this is one that should've been avoided for the obvious reasons.

People do realize that all snap chat does is take pictures and send it to people.... right?

[recentstockowner]

Great comment. Better yet is watching BABA liquidate YHOO equity position in the ipo. just another Wallstreet Snap chat moment in investing...