Yahoo is in talks to invest millions of dollars into mobile messaging app Snapchat.
The Wall Street Journal has reported that the internet company is utilising the money raised from selling its stake in Alibaba to invest in the popular photo messaging. Snapchat, launched in 2011, has previously rejected a series of takeover bids from the likes of Facebook, Alibaba and Tencent, and has refused to comment on the potential investment from Yahoo.
Snapchat has been a huge success since launching three years ago. It allows users to send picture messages to their friends for free but the unique selling point is that the images are only available for a maximum of ten seconds after which the images or videos "disappear". In December 2013, the company had a reported 30 million users but by April 2014 this had grown to 70 million.
The company has become an attractive proposal to many of the major tech giants and reports suggest that Yahoo is preparing to invest $20 million (£12.5 million) in Snapchat's next funding round. It has been made possible after Yahoo sold a 40 per cent stake in Alibaba, purchased by co-founder Jerry Yang in 2005 for around $1 billion, during September's initial public offering for $9 billion before taxes.
Should Yahoo's investment come to fruition then it could value Snapchat at around $10 billion and will see Yahoo further make commitments to mobile technology.
The company recently purchased mobile-chat application MessageMe, an app which allows users to "ping" friends with emoticons and stickers from their smartphone. However, the service is expected to be closed down in November as its eight members staff move to Yahoo to work on developing mobile products.
Under the tutelage of chief executive officer Marissa Mayer, Yahoo also acquired blogging platform Tumblr for around $1 billion in the past 12 months.
Find up to date information on the FTSE 100 and spread betting strategies at City Index.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.