Yahoo Inc. plans to reinvest a small portion of the cash it made from last month's Alibaba IPO in disappearing chat app Snapchat. According to a Wall Street Journal report, Yahoo is set to invest about $20 million in Snapchat.
Over the past few months, the ephemeral messaging startup has been working to secure capital from a mix of venture-capital firms, money managers and companies. Snapchat could become an important strategic partner for Yahoo, as it seeks new ways to distribute its content, apps and ads in the mobile world.
But at a $10 billion valuation, Snapchat also represents a risky investment in a startup that has yet to turn its popular mobile service into a business that generates revenue.
The three-year-old company, whose app lets people send messages, photos and video that typically disappear after 10 seconds, has more than 100 million users. According to the report, Snapchat is planning to debut a new service for vanishing news articles and advertisements in the coming weeks.
Yahoo CEO Marissa Mayer made a string of acquisitions in recent years, including the purchase of blogging site Tumblr and Summly, the news aggregation site created by a British teenager. There's even rumors that Yahoo could buy AOL. She's also made a big effort to focus more on mobile, social, and video.
Interestingly, Yahoo also bought messaging app MessageMe late last week and then immediately shut it down. That strategy begs the question of whether Yahoo has its own plans in the mobile messaging space.
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