The popularity of social media player Facebook and Twitter are slowly losing their "cool" factor not only to users, but evidently to investors as well. Although Twitter had performed well in its debut on the stock market, it had yet to generate equity returns to its investors even though it boasted a 500 million registered user base. Facebook, on the other hand, already reported that it saw a decline in engagement from its youngest users.
Facebook got its biggest slap yet from a three year-old messaging startup Snapchat. The social media giant extended a USD3 billion cash offer to buy out the startup. However, founders of Snapchat decided to reject the offer according to sources cited by the Wall Street Journal, and VentureBeat in an earlier report initially deduced that the startup might have been busy contemplating its other offers. For one, Snapchat received a significant investment offer from Tencent Holdings that would easily put the startup's market valuation at USD4 billion.
However, the article published on VentureBeat pointed out that as per suggestion by Jenna Wortham on her New York Times' article, Facebook is slowly losing its cool factor.
"If Snapchat's funding was premised on the idea that users inherently tire of their social media platforms due to overuse, and its attractiveness stems from its astronomical user-adoption curve (350 million snaps per day in September vs. 200 million in June), then why turn down such an enticing offer when an even younger competitor is surely right behind you and your own popularity will eventually wane?" the article on VentureBeat read.
Facebook's relevance in teens and tweens might or might not be something that founder Mark Zuckerberg need to pay attention to, but business models set up on this premise would clearly put doubt on the longevity and the long-term growth of social media platforms including Twitter and Snapchat despite its massive user base, the VentureBeat article read.
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