Why Snapchat Is Worth Billions

According to a regulatory filing that surfaced this week, Snapchat raised an additional $1.81 billion in funding from various investors. Since 2011, the company behind the popular chat app has raised more than $2.6 billion and is currently valued at around $20 billion.

So why is it that investors are pumping so much money into an app that generated just $59 million in revenue last year? For starters, Snapchat is extremely popular among young Americans. Having recently inherited the teenage social media crown from Instagram, it caters to a new generation of users for whom Facebook and Twitter are old news.

Moreover, Snapchat’s highly engaged user base is growing rapidly. According to an investor pitch deck that surfaced this week, the number of people using Snapchat every day grew by around 50 percent in each quarter last year. By the end of 2015, Snapchat had 110 million daily active users who combined to an impressive 10 billion video views per day.