Alibaba's interest in Snapchat has disappeared.
While there have been persistent reports, including one in Forbes Friday, that the Chinese e-commerce giant was going to make a big investment in the popular Los Angeles-area ephemeral messaging company, numerous sources familiar with the situation said that this is not happening.
While the two companies did have initial discussions in the past, these sources added, those talks have been long over, even before an initial report about a possible Alibaba investment in Snapchat from Bloomberg last month.
"That report was an echo, I guess," said one source.
Among other reasons for not pursuing such a high-profile deal at this moment, it's pretty clear it would cause too much of a noisy splash ahead of Alibaba's anticipated IPO on the New York Stock Exchange in September. Alibaba's entire focus of late has been on this massive transaction, which could be the largest tech IPO in history and also one of the most scrutinized.
More indicative of its intentions: Alibaba has been on a hiring spree of late to put in place a solid U.S.-based team that will better interface with Wall Street and government regulators, especially given possible controversy around its Chinese origins.
As an aside, it is somewhat amusing that soon-to-be-rich Alibaba is now getting named as a possible investor or acquirer of a number of U.S. companies. Just FYI, while a number of bigger transactions here may come much later, it's not buying Yahoo or eBay today. Nor should it if it wants this public offering to go smoothly.
As for Snapchat, it has indeed been mulling new funding that could value the company at close to $10 billion. Forbes also reported today that "Snapchat authorized the sale of 17.4 million preferred shares in a Delaware filing made Monday."
What that means is unclear, especially given the variety of rumors about a new spate of investment in the company rocketing around Silicon Valley, including even a secondary sale of stock by CEO Evan Spiegel himself.
In fact, according to numerous people close to the company, the 24-year-old CEO has been very secretive about every aspect of the company, including any funding, and reluctant to share slide decks and product roadmap information with any potential investors.
Eventually, that might change — beyond its lobbying efforts, the company has been actively looking to hire a big-name public relations, policy and communications strategy exec to improve itself in the increasingly important arena. But not today!
One area that many are focused on is the potential for revenue, which is the purview of formerFacebook and Google exec Emily White. Snapchat has been expanding its product offerings of late, many of which have clear advertising opportunities.
The ever-morphing and fast-growing ephemeral app recently introduced nifty geofilters and a group sharing feature called "Our Story," for example, interesting new developments that most clearly point the way to where it is going in terms of monetization.
Snapchat's most recent round of financing was back in December, when the company took $50 million in funding from hedge fund Coatue Management. Reports of a larger investment at the time, including one here, were wrong. (See Evan, we admit our past mistakes at Re/code!)
Overall, along with Coatue, the company has raised about $140 million from investors including Lightspeed Venture Partners, Institutional Venture Partners, Alibaba rival Tencent, SV Angel, General Catalyst Partners and Benchmark.
An Alibaba spokesman declined to comment and Spiegel has not returned an email sent seeking comment.
—By Kurt Wagner and Kara Swisher, Re/code.net.
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