Fidelity writes down value of Snapchat holding by 25pc

Square, for instance, recently revealed that it will try to go public with a valuation of about $4 billion-a third less than the $6 billion private investors had valued it at as recently as October of a year ago.

As the Financial Times reports, Fidelity has dropped its share valuation for Snapchat from $US30.72 in June to $US22.91 now.

Nevertheless, the markdown of Snapchat – whose viral spread among teens has grown its user base to more than 100 million – still came as a shock to many tech insiders. Fidelity participated in Snapchat’s Series F round earlier this year, at an estimated $15 billion valuation.

Snapchat and Fidelity did not respond to requests for comment.

Mutual funds, which are required to report the value of their holdings quarterly, vary in how they calculate the value of private startups, which often don’t provide detailed updates on financial performance.

Documents posted online by Fidelity show that $35.2 million worth of Snapchat shares it held across three mutual funds since at least March were marked down over the summer to $26.3 billion.

Snapchat continues to grow spectacularly, with around 6bn videos viewed on the app every day, a number that has tripled in six months.

Valuations in private technology companies depend on a range of factors, including the financials that start-ups disclose to their investors to the share price of similar companies trading in the public markets. Fidelity, which participated in that round, joined high profile Snapchat investors that include Alibaba, Benchmark and Kleiner Caulfield Perkins & Byers.

Earlier this month Fidelity also decided that another tech company wasn’t worth as much as it thought, marking down Dropbox’s valuation from $US10 billion to $US8 billion.