Here's how you calculate the worth of a company: Consider the lifetime of the company. Record an estimate of all the profits and losses the company will ever m

Here's how you calculate the worth of a company: Consider the lifetime of the company. Record an estimate of all the profits and losses the company will ever make over that lifetime. Discount each number for risk, inflation, and opportunity cost (because money is more valuable if you have it now and invest it in something profitable than if you wait 10 years - you should probably discount at least 4% a year, which is about what the average inflation-adjusted market return is). This number is the appropriate value of the company. Naturally, there's a lot of guesstimates going into here with the profits-and-losses / risk, even for big stable companies. The high price of Snapchat means that someone with money believes that Snapchat will generate a lot of revenue, or that they will be bought out. It's quite possible they're totally crazy, or that they've wrong about the risk.