This is the question that's been circulating through social media marketing circles this week after reports that Snapchat is raising more financing at a valuation of around $20 billion. That number is staggering, particularly when you consider Snapchat turned down a $3 billion offer from Facebook to buy them out back in 2013 - an offer that, at the time, was considered well above what the app was worth (Snapchat says the offer from Facebook was actually well above $3 billion). The valuation's even more surprising when you consider Snapchat was valued at $16 billion in May last year, a number many thought was also too high (that valuation was subsequently lowered by some investment firms later in the year).

So is Snapchat really worth $20 billion? Let's take a look at the numbers.

A Question of Growth

First off, you have to assess the value of Snapchat in the context of other players in the market. As noted by Steve Brotman, a Managing Partner at Alpha Venture Partners, in an interview with CNBC:

"Snapchat's growing faster than Facebook, it has about 40% of the engagement Facebook has, with about 10%-15% of its daily active user count. Today Facebook is worth $330 billion - is Snapchat 1/16 of Facebook, given those numbers? I'd say that if you're growing at 100% a year, arguably it's worth more."

This is the crux of the case for Snapchat - on a comparative scale, Snapchat's valuation is within the realm of logic. But on the other side of that comparison, Twitter's currently valued at around $10 billion (down from a high of $40 billion) while Pinterest is worth $11 billion. Does Snapchat have double the monetization potential of those platforms?

Snapchat's certainly growing much faster, now reaching more than 110 million daily active users who are contributing more than 10 billion video views on the platform every day.

(Image from a leaked Snapchat slide deck, obtained by TechCrunch)

Snapchat users are also highly engaged, with 60% of them actively creating content, and spending an average of 30 minutes per day in-app.

The immersive and immediate nature of Snaps - that they take up the full screen and disappear after viewing - lends the format to higher levels of interaction, you can't really be a passive Snapchat user. Sure, you could just view content, but even to do that, you need to actively click on what you want to see. This has changed slightly with the recent switch to 'Auto-advance Stories', meaning the stories of people you follow flow into the next after they end, but the principle remains. Unlike Twitter or Facebook where you can scroll through your news feed and not really pay attention to anything, Snapchat requires interaction and attention. And that element is powerful.

Then again, there is, of course, an argument to be made that the video metrics of Snapchat are inaccurate on a comparative scale - Snapchat counts a video view as soon as a snap is loaded, and the limitations of Snapchat video (recordings can be up to 10 seconds, max) mean that inevitably users are going to view more videos on the platform - a one minute video that you could watch on Facebook or YouTube would need to be split over 6 Snaps, so the equivalent view count is multiplied 6x for the same content. But even taking that into account, the activity metrics are still very high.

Snapchat went from 8 billion video views in February to 10 billion in May - a 25% increase in 3 months. You can argue the details, but the fact remains that there's a lot of momentum behind the app.

Add to this the growth in messaging, which is currently the most dominant form of daily communication amongst teen users, according to Pew Research.

And add to that the wider trend of messaging, which has seen Facebook allocate significant resources to their own messaging products to keep up with user demand - Facebook recently noted that it's now handling around 3x more messages per day than SMS messages were being sent at peak.

As noted by Brotman in his interview on CNBC:

"A lot of smart people are banking on chat and messaging as the next social media revolution."

And he's right - messaging is seen by many as the next evolution, the next wave of social media. It's more personalized, it's more immediate. It's social without the amplification factor - not everyone needs to see every thought you have on every issue. And not everyone wants their every post kept for posterity, and potentially used against them at a later date. Messaging apps have, in some ways, become the reflex to too much social visibility, and Snapchat, of course, is at the forefront of that movement.

And given its appeal among younger users (Snapchat says that more than 60% of U.S. smartphone users are Snapchatters), and its continued growth, particularly through evolutions like their recent messaging update, Snapchat does seem well-placed to be able to capitalize on all that attention and convert that into significant money some time soon.

But that's the other side of the argument - while Snapchat has a heap of potential, at the moment, 'potential' is really all it is.

Will Snapchat's userbase stick with them when they do look to make more serious monetization plays?

Mo' Money, Mo' Problems

And here's why some market analysts don't agree with Snapchat's $20 billion valuation - Snapchat, as yet, doesn't generate any profit.

Of course, Snapchat's not a public company (yet), so we don't know for sure how much money Snapchat actually makes (though data from a recent Snapchat presentation to investors suggests the company made $59 million for FY 2015).

But of course, all of that goes back into development and investing in the platform. So, like many social networks before it, Snapchat will take some time to become a profitable business, which is, logically, a concern when you're assessing its actual worth.

This is where the comparison to Facebook loses a little steam - definitely, in terms of audience attention, Snapchat is comparable, on some scale, to Zuckerberg's social giant. But Facebook has turned its network into a money making machine - last year, Facebook hit $17.93 billion in full-year revenue.

To compare the two in terms of engagement and use is fair, considering where Snapchat is in its development, yet at the same time, such comparisons also discount the amazing work Facebook has done in evolving their platform into the revenue generating beast it now is, and much of that, it's worth noting, is on the back of Facebook's vast user data and insights, something Snapchat doesn't have in the same measure. On that front, Snapchat's more comparable to Twitter - they can track your basic details and the content you're engaging with, but Facebook has Likes, it knows your interests, your relationships. Facebook's data is arguably the most significant element of it's ad system, an ad networks that's proving evermore lucrative - Facebook's average revenue per user in the US and Canada was higher than $10 per quarter over the full-year in 2015. Per user.

Now one way to look at that is to consider what Snapchat could do once they've matured their advertising system - they're developing, they're growing. If they can serve a few ads to even a percentage of their audience they'll be on track. And as noted, Snapchat has engagement on its side - take a look at this comparison from the Snapchat Ads website.

At present, Snapchat has several avenues for monetization - there's paid ads within Discover content (and reportedly, some publishers have even paid for placement in Discover), there's sponsored Lenses, of which the latest installment in the X-Men franchise recently became the first advertiser to utilize a complete takeover of Snapchat's lenses, and there's smaller options like paid geo-filters. And while Snapchat is evolving these offerings and developing them into more significant revenue generators, many also see that Snapchat has huge ad potential, particularly if they were to, say, start slipping in ads between stories, or even within user stories if they saw fit. That would obviously have a significant impact on the user experience, but Facebook's been able to successfully monetize by adding in ads - it seems the most logical way for Snapchat to also advance.

But right now, Snapchat's prime directive is to remain a crucial and important platform to their users in order to maintain their share of attention and become more engrained into their social interactions. If the app's considered more essential, it makes it easier for Snapchat to roll in more ad options, and to remain 'essential', Snapchat needs to not only deliver regular new innovations to keep their audience interested, but they also need to advance and evolve along with their users in order to move beyond being a teen-fad app.

This is why they're taking their 2016 Presidential Election coverage so seriously, hiring a former CNN political reporter to head up their coverage. This is why they've signed a deal with NBC to show Olympic highlights via Snap. If Snapchat can evolve and remain a crucial connective tool as their user base moves into the next stages of their lives, and their interests shift accordingly, that'll be a big step in the right direction for the ephemeral content app.

This, too, is why their recent messaging update was more about regular messaging features, as opposed to face-altering tricks and emoji.

Thus far, Snapchat's done well in this progression, evolving the platform without harming the user experience. But questions will remain about the app's actual worth till they can prove it actually is a viable business, that they can actually translate all those eyeballs into money.

So what's the answer - is Snapchat worth $20 billion?

It's definitely worth a lot, and it's definitely on track, but the more conservative among us would probably like to wait and see how their audience responds to more ad content before making any bets one way or another.

One thing that's totally clear is that Snapchat is for real, and it's evolving at a solid pace.

Even Facebook's concerned about the threat of Snapchat - just recently, The Social network put out a questionnaire in response to declining shares of personal updates on the platform, which asked users if they were switching over to Snapchat to share more personal content.

As noted by Brotman, It's hard to argue Snapchat's not worth a portion of Facebook's valuation - but exactly how much remains to be seen.