Within the newest signal that some tech startups are overvalued, Fidelity has written down the worth of its stake in Snapchat by 25 %, in line with a report by Morningstar. Fidelity participated in Snapchat’s Collection F spherical earlier this yr, at an estimated $ 15 billion valuation.
The report, first recognized by the Monetary Occasions, confirmed that Fidelity valued its Snapchat shares at $ 30.72 on the finish of June. Simply three months later, shares have been written down to only $ 22.91.
It's unclear what brought about Fidelity to reassess its Snapchat funding, however Blackrock equally wrote down its Dropbox stake this yr. Dropbox and Snapchat aren’t the one ones facing challenges on the subject of their valuations: Sq. valued itself at round $ 4.16 billion in its IPO pricing, as soon as once more under its $ 6 billion valuation from its earlier financing rounds.
As startups keep personal longer, Fidelity and different fund managers are investing in pre-IPO corporations. Different Fidelity investments embrace Airbnb and Dropbox. Los Angeles-based mostly Snapchat counts Kleiner Perkins, Benchmark and Alibaba amongst its different buyers. The service, which popularized disappearing pictures, has been round for about 4 years.
Whatever the progress Snapchat is making, it’s facing growing competitors not solely on video, however on all fronts. For instance, Snapchat just lately surpassed 6 billion movies every day, up from 2 billion earlier this yr. However whereas it seems like a spotlight level for the corporate after its acquisition of Looksery, it’s an more and more aggressive area. Fb, too, stated it had greater than 8 billion video views every day.
Fidelity declined to remark. Snapchat didn't reply for remark.
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Source : TechCrunch