In the latest sign that some tech startups are overvalued, Fidelity has written down the value of its stake in Snapchat by 25 percent, according to a report by Morningstar. Fidelity participated in Snapchat’s Series F round earlier this year, at an estimated $15 billion valuation.
The report, first identified by the Financial Times, showed that Fidelity valued its Snapchat shares at $30.72 at the end of June. Just three months later, shares were written down to just $22.91.
It is unclear what caused Fidelity to reassess its Snapchat investment, but Blackrock similarly wrote down its Dropbox stake this year. Dropbox and Snapchat aren’t the only ones facing challenges when it comes to their valuations: Square valued itself at around $4.16 billion in its IPO pricing, once again below its $6 billion valuation from its previous financing rounds.
As startups stay private longer, Fidelity and other fund managers are investing in pre-IPO companies. Other Fidelity investments include Airbnb and Dropbox. Los Angeles-based Snapchat counts Kleiner Perkins, Benchmark and Alibaba among its other investors. The service, which popularized disappearing photos, has been around for about four years.
Regardless of the progress Snapchat is making, it’s facing increasing competition not only on video, but on all fronts. For example, Snapchat recently surpassed 6 billion videos daily, up from 2 billion earlier this year. But while it looks like a focus point for the company after its acquisition of Looksery, it’s an increasingly competitive space. Facebook, too, said it had more than 8 billion video views daily.
Fidelity declined to comment. Snapchat did not respond for comment.