Snapchat May See $10B Valuation in Alibaba Talks

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July 30 (Bloomberg) -- Alec Ross, senior fellow at Columbia University, and Bloomberg’s Cory Johnson examine talks between Snapchat and Alibaba Group Holdings that could value the mobile messaging application at $10 billion. They speak on “Market Makers.”

With no revenues.

This is a valuation equivalent of electronic arts or burger king.

It is a huge number in terms of valuation.

You are asking me to make sense of this, why is this justified?

First of all, the deal isn't done yet but there are 2 interesting components.

The first is snapchat the business.

A former morgan stanley analyst does this great internet trends report every year and she talks about messaging.

What's apple -- whatsapp is doing, according to her, 50 billion messages a day.

Snapchat is doing 1.2 billion messages a day -- ok, but that is volume.

Does volume translate into revenue?

Why does ali baba and the rest of the world theoretically see the value there?

We are going from technology to connect everyone to technology that is only nice to people in the phone book.

It could be a platform for the revenues -- and not saying there should be an investment like this but when people look at this -- that is why folks are so excited about this.

So many people are connecting on this platform.

Sending pictures of all kinds of junk.

Is that why they are excited or are they excited because other companies will be valued -- the social spaces in china and the u.s. are so different.

Is there going to be a problem with a chinese company -- i am not even talking about regulation -- just in terms of culture, acquiring a u.s. based social media platform?

That is based entirely on the degree to which they dig into how the organization is being managed.

If they stay relatively hands-off, i don't think it will be a problem.

But if track once to run snapchat the same way he runs ali baba -- in terms of global politics, chinese companies are able to do things in china that u.s. companies are not.

Google is not in china, facebook is not very much in china.

Giving a head start to chinese-based companies that don't have to compete with the likes of amazon, facebook, google -- if snapchat becomes a messaging cut from the can be used legally in china, suddenly they have a massive global market that competitors cannot get into.

It is more valuable to alibaba than anyone else.

This text has been automatically generated. It may not be 100% accurate.

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