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Yahoo looking into Snapchat investment, report says

As the Internet giant decides what to do with its Alibaba windfall, an investment into the disappearing-message app may be on the horizon.

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Yahoo may invest in Snapchat with part of its windfall from Allibaba's IPO. Richard Nieva/CNET

Yahoo is in talks to invest in the popular messaging app Snapchat, as it considers what to do with the multibillion-dollar cash haul it got from the market debut of the e-commerce giant Alibaba last month, according to The Wall Street Journal.

The investment round would value Snapchat -- which specializes in messages that disappear seconds after they've been opened -- at $10 billion, though it's unclear how much Yahoo would invest.

A Yahoo spokesperson declined to comment on the report, and Snapchat did not immediately respond to a request for comment.

The news comes while investors await Yahoo CEO Marissa Mayer's next moves, as scrutiny of the company increases in the wake of the Alibaba IPO. In the offering, Yahoo got a windfall of over $8 billion for selling about 6 percent of its stake in the Chinese company. Activist investors have also been clamoring for transformative corporate moves, like merging with AOL or selling to Japanese telecommunications company Softbank.

Yahoo is in the midst of an attempted turnaround as it tries to rejuvenate its ailing core products and advertising business. The company has already refreshed each of its mobile properties, including Yahoo Sports and Finance, but the updated product suite has yet to rock Yahoo's bottom line. The company doesn't break out mobile revenue, and display-ad revenue -- an important financial metric for the company -- slumped 7 percent last quarter. The company has already promised to return at least half of the IPO proceeds to investors, but the large influx of capital, coupled with the cash it already had on hand, gives Yahoo some flexibility.

Snapchat is no stranger to big-tech suitors. The company, which makes almost no revenue, has reportedly spurned acquisition offers of more than $3 billion from the likes of Facebook and Google.

The possible investment in Snapchat also comes as Yahoo seems to be bolstering its internal efforts at building a mobile messaging service. The company has acquired the startup MessageMe, a service similar to Facebook's WhatsApp. The buyout was a talent grab, with MessageMe shutting down and the startup's eight members joining Yahoo, a spokesperson for the Internet giant told CNET.

The MessageMe team will be working on mobile communications products for Yahoo, the startup said in a blog post. TechCrunch had earlier reported the news.

Updated, 5:25 p.m. PT: Adds confirmation of MessageMe by Yahoo.