Snapchat has become the latest popular mobile app to be valued in the billions. It’s joining an ultra-exclusive list, but if you wonder how an app can be worth tens of billions of dollars, you are not alone.
CGTN’s Phil Lavelle found out what goes into deciding how much a tech company is worth.
Snapchat valued at $30B following launch on stock marketSnapchat has become the latest popular mobile app to be valued in the billions. It's joining an ultra-exclusive list, but if you wonder how an app can be worth tens of billions of dollars, you are not alone. CGTN's Phil Lavelle found out what goes into deciding how much a tech company is worth.
Snap Inc., valued around $30 billion when it went public recently, putting it above El Salvador, Estonia, St.Lucia and Samoa – among others. It is the newest member of this billion dollar club.
Question is – how can apps – which are basically computer code – be worth such dizzying amounts. What goes into deciding what a company is worth when it is valued at such an astronomical amount?
Howard Love is a man who knows. He is a serial Silicon Valley entrepreneur.
In short, it’s about hopes and dreams, but in full, all that money is for more than just an app. It’s everything that app impacts.
“What it represents are the future economic possibilities of the company. So in the case of Uber, they’re disrupting major sections of the economy for travel and you could look at it as they’re disrupting car ownership to some degree, they’re disrupting hub transportation and so forth, so they’re taking chunks of the transportation economy,” Love said.
Big money valuations, of course, make the news, even though they’re not that unusual these days. Facebook’s been valued at up to around $350 billion. It bought WhatsApp – for $19 billion. Instagram – a mere one billion dollar purchase. Air BnB – sitting around $30 billion.
But for these companies, it’s not just about getting the cash, it’s about getting the right message out to all of those users.