Fidelity Marks Down Value of Snapchat Stake by 25%
November 10 2015 - 4:00PM
Dow Jones News
An early investor in Snapchat Inc. is marking down its
investment in the ephemeral-chat startup.
Mutual-fund investor Fidelity Investments reduced its estimated
value of its stake in Snapchat by 25% in September, according to
regulatory filings. The change was the first by Fidelity since it
invested in Snapchat in May at a valuation of $16 billion.
The revised valuation comes amid growing uncertainty around the
soaring valuations of private tech startups. A recent dearth of
successful initial public offerings for tech companies has cast a
chill over Silicon Valley.
More than 120 private startups valued at $1 billion or more are
now wondering whether those valuations will ever be supported by
public market investors. On Friday, payment processor Square Inc.
proposed to value itself at $3.9 billion in a planned initial
public offering, down from $6 billion last year.
Snapchat, with more than 100 million daily users of its free
disappearing-message app, is working to make more money from those
users. In the past year, Snapchat has started selling ads to
marketers including Coca-Cola Co. and Samsung Electronics Co. and
begun charging for extras like the ability to replay three messages
for 99 cents. In August, it hired its first finance chief, former
Mattel Inc. executive Drew Vollero.
The company expects to generate about $50 million in revenue
this year, a person familiar with the matter told The Wall Street
Journal in August.
It is unclear whether Fidelity marked down its valuation of
Snapchat because of a change in its performance or a change in
market conditions, or both. A spokesman for Fidelity and a
spokeswoman for Snapchat declined to comment.
Mutual funds, which are required to report the value of their
holdings quarterly, vary in how they calculate the value of private
startups, which often don't provide detailed updates on financial
performance. An analysis by The Wall Street Journal of closely held
technology startups worth at least $1 billion found 12 instances
where a company was valued differently by different fund managers
on the same date.
Earlier this year, BlackRock Inc., an investor in cloud-storage
startup Dropbox Inc., cut its estimate of the company's per-share
value by 24%, securities filings show.
Fidelity's lowered valuation for Snapchat was earlier reported
by the Financial Times.
Write to Douglas MacMillan at douglas.macmillan@wsj.com and
Kirsten Grind at kirsten.grind@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 10, 2015 15:45 ET (20:45 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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