In 2013, teenage attention-pit Snapchat turned down a $3 billion buyout offer from Facebook, which is only not an insane and arrogant decision if you’re going to reap so much profit that you’re eventually worth more than that. Internal financial documents obtained by Gawker show Snapchat was very far from profitable last year.

Shortly after news broke that an app for sending and viewing pictures considered itself worth more than $3 billion, accused Wall Street fraud and Business Insider editor-in-chief Henry Blodget wrote a dreamily optimistic post about Snapchat’s fortunes. In the article (“EXCLUSIVE: How Snapchat Plans To Make Money”), Blodget offered some hypothetical napkin math (emphasis his):

So, for Snapchat’s $3 billion valuation to be reasonable, you have to assume that Snapchat will some day generate, say, $500 million of revenue and $200 million of profit (there’s a time-value of money and a discount rate that need to be factored into the valuation. For simplicity’s sake, we’ll just use numbers than are bigger than the actual revenue and profit numbers we need.)

Blodget’s big exclusive was that Snapchat would probably use advertising to make money, since teens are averse to paying for literally anything. That was two years ago. In May, Bloomberg Business had another exclusive non-exclusive: “Evan Spiegel Reveals Plan to Turn Snapchat Into a Real Business.” The secret is...

After starting to run select video ads earlier this year, Snapchat is about to begin soliciting other big advertisers with some new numbers that assert its audience is bigger, younger, and more obsessive than anything on television.

Advertising. But Snapchat has been advertising since last year—and the internal financials obtained by Gawker show that between January and November of 2014, the company lost a whopping $128 million while bringing in just $3 million in revenue. Mike Dempsey of venture capital analytics firm CB Insights describes this red ink as “big for 11 months, but not outrageous,” adding that “if Snapchat is at a similar point right now in its business lifecycle as 2012-2013 Twitter, the new funding probably gives them a multi-year runway.”

One eye-popping number is the $13.7 million spent on “outside services”—almost as much as Snapchat spends on its payroll. It’s unclear what sort of spending that category includes—it often refers to professional expenses like consultants, accountants, and other advisers—or why it’s so high. Luckily for Snapchat, the company has well over $300 million in cash on hand:

The period covered by these documents would only reflect about a month and a half of ad revenue, since Snapchat only started its ad program in mid-October of 2014. But even if we round generously in Snapchat’s favor and call it $3 million per month in ad income, that that wouldn’t come close to overcoming Snapchat’s costs.

This data is notably missing ad revenue from Snapchat’s “Discover” feature, where media properties like Vice and Cosmopolitan offer micro-broadcasts, because it wasn’t rolled out until early 2015. Given that Discover made waves (and eye-rolls) for its colossal rates, this is an appreciable chunk of change we’re not seeing. But according to the Bloomberg writeup, Discover hasn’t proven to be the cash cow Snapchat probably expected:

Snapchat’s media partners say traffic to the new Discover page in the Snapchat app started strong when it was introduced in January and fell off dramatically after the initial surge of interest. [...] ...Snapchat’s ad rates have declined rapidly. This month the company announced it would start to charge $20 per 1,000 views, a fraction of its earlier price, agencies say.

If Discover proves to be a bust, it’s hard to imagine Snapchat’s bottom line improving much. And if the company can’t justify a $3 billion valuation, how in the hell did it convince investors it was worth $15 billion?

Snapchat declined to comment.

Illustration by Jim Cooke. Additional reporting by Tommy Craggs.

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