Verizon, Twitter and Snapchat all take turns in the rumour mill

Verizon, Twitter and Snapchat Snap have all hit the headlines with rumours swirling faster than the day following the office Christmas party.

Jamie Davies

October 7, 2016

5 Min Read
Verizon, Twitter and Snapchat all take turns in the rumour mill

Verizon, Twitter and Snapchat Snap have all hit the headlines with rumours swirling faster than the day following the office Christmas party.

With Verizon smelling blood in its dealings with Yahoo, Twitter finding itself in a similar position to the fat kid in P.E. class and Snap putting forward some pretty confident numbers; there is certainly plenty of opportunity to speculate.

Starting with Verizon and what now seems more like an episode of Coronation Street than an acquisition. There was a lot of will-they, won’t-they flirting in the beginning, then they finally got together, then dirt was dug up from Yahoo’s past, and it looked like the romance was on the rocks. Instead, Verizon is using the situation to its advantage. Like the spouse who hates the fact its partner smokes; if you want this relationship to continue, you’re going to have to give something up.

In the case of the Verizon/Yahoo saga, it looks like it’s going to be $1 billion. According to the New York Post, Tim Armstrong, who runs the Verizon content business, is starting to get a bit irritated by the lack of disclosure from Yahoo and is seeking a discount of $1 billion off the pending $4.8 billion acquisition.

It has been a bad couple of weeks for Yahoo but this is the blow which will hurt the most. Alongside the 2014 hacking scandal, news emerged the team had been ordered by a secret Foreign Intelligence Surveillance Court to scan emails for terrorist signatures. And now Verizon have smelt blood and will be pushing as hard as a punter in Marrakech trying to buy a leather belt.

At the beginning of the year the long-suffering Yahoo shareholders must have thought their prayers had been answered with talks of an acquisition from Verizon, but its quickly turning into a bad dream. It’s been a stream of bad news for the shareholders since the announcement of the acquisition, but it does look like it will be coming to an end shortly… unless there are more skeletons in the Yahoo closet.

Elsewhere, Snap is rumoured to be on the verge of an IPO which could value the business up to $25 billion. No need to reread the last sentence, it does say $25 billion.

According to The Wall Street Journal, the Snap management team are currently working on an initial public offering for some point during 2017 H1 which could value the company at $25 billion or higher. That is a serious amount of cash for a company which doesn’t really make that much money when its outreach is taken into consideration.

The company has around 150 million daily active users, though the financials of the business have been under scrutiny on-and-off for some time. Although the company has recently launched its Spectacles product line, which does take it into the potentially lucrative video production market, advertising revenues have not been at the same heights as its user base. has questioned the advertising potential of Snapchat in the past; your correspondent isn’t too sure how lucrative sponsored filters or channels will be to the company, so there is a slight question mark as to where the revenues are going to come from.

Revenues are not always the biggest factor in deciding the value of a brand as some may point out. WhatsApp was valued by Facebook at $19 billion and LinkedIn by Microsoft at $26 billion, as the vast amount of data controlled by the brands. Facebook is currently on the verge of capitalizing on this juicy data by changing the WhatsApp terms and conditions recently. The brands were valued at these lofty figures because Facebook and LinkedIn were buying the data not the revenues.

This is not the case with the Snap IPO. Investors and shareholders buy revenues, profits and dividends, not data. Yes, these are intelligent individuals and they will look at the future potential of the business, however unless there is continued diversification in the Snapchat advertising model and new products released, $25 billion looks like a very big number.

That said it is not out of the question. has also previously questioned where the investment for future R&D will come from if advertising revenues are not increased; an IPO of this nature will certainly create some additional funds for innovation. Another useful knock-on effect might be the confidence in the brand Snapchat business itself. Big brands are probably more likely to invest heavy advertising dollars in a listed company as opposed to a ‘start-up’, as there will be increased confidence in the longevity of a listed company.

Finally, Twitter seems to be having a horrid time at the moment. Once the poster boy of the social media movement, the company has been the focal point of acquisition rumours for some time however these rumours are starting to run dry.

Last week there were a stream of suitors all of which were clamouring at the opportunity to win the hand of Twitter (apparently), but now Twitter is lurking around the edges of the dancefloor, the ugly one with lots of personality who no-one really wants to dance with. According to Recode, Google has dropped out, Apple isn’t involved and Disney considered it but not anymore. Facebook was likely never in the running, and Salesforce’s Marc Benioff distanced himself from the acquisition at Dreamforce this week, which actually resulted in a boost in the Salesforce share price!

The acquisition process is underway and is not going to be stopped now, but there doesn’t seem to be a lot of demand from Silicon Valley for the services of Twitter. Private equity is another option here and this would give Twitter the freedom to reinvest and create a proposition capable of taking on the likes of Facebook, but only time will tell.

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