A lot of people seem to question Snapchat's vision and profitability (even in this thread) especially with such a high evaluation. I thought I'd take a stab at it (all speculation based by current trends).

So Snapchat needs to be broken down into 3 key components:

1. Users/Growth

2. Business

3. Tech

So let's look into each...

1. Users/Growth:

Snapchat is growing rapidly (~150 million active users[0]) and seems to know how to generate hype using various tactics (like the Spectacles for example...instead of just selling it, they appear at specific places at specific times, similar to timed filters and stories). Furthermore, they don't seem to mind experimenting - I had recently seen rumors floating around of Snapchat getting into the drone game too - based on some of their recently open positions). They seems to have gotten a tight grasp at the younger-ish market (14 - 30ish?) and either they'll continue to be hip and keep attracting that age group or they'll grow with their current userbase. Eitherway, the userbase is (very) loyal and hooked (~30 mins/day of usage [1]).

2. Business

Based on 1, we know Snapchat is growing and it's got a loyal base, which means they are a great place to advertise. As of right now, it appears that only the "big" players have the access to advertise their content effectively - movie filters, stories etc. (and Snapchat seems to be making a lot of revenue from just this alone - ~ $350 million [0]). But from this subset, it can be seen that Snapchat is an effective medium for the current demographic (they are young, generally willing to spend and do or will grow up to have expendable income to spend).

Smaller players (those who can't afford filters and stories) generally pay Snapchat celebrities to advertise to their large(-ish) user base but given Snapchat's intentions (for IPO), that could change pretty soon.

To add to the above, Snapchat seems to be poised to move into the physical-virtual (augmented) ads space too, with geo filters. (Given their recent release of Spectacles, I'd say it'd be trivial to have something along the lines of Google Beacons/iBeacons - providing hyper local filters, discounts and so on. Furthermore, this can easily expand/integrate into a marketplace, providing even more revenue.

3. Tech

If you have noticed, they have gotten their users to use AR (filters, geo-filters, Spectacles) without the "geekiness" involved that others currently involve. (yes, Hololens is still a lot geeky, pricer and a extra device than a iPhone)
They appear have stumbled onto great ideas, but I have a feeling that it's highly calculated (I could be wrong) and they seem to have an idea / vision of what their future is or where they want to head.

Current Competition (Subjective):

Facebook seems to be intent on trying to capture the Snapchat market - most recently with Instagram Stories. In my opinion, Instagram Stories is not exactly similar but close enough. I feel like it'd not take off as much as Snapchat (but it does not have to) as much (I'd probably eat my words later), because it's easier to track users (I know this is what marketers are looking for, but from a user's perspective - It does not feel natural, feel a bit more judged and overall just like a nice facebook for photos. It's great if you want to grow a userbase and so on but you can do so on Snapchat too.

My take:

I feel that Snapchat for companies/marketers/users who are looking for more, require a change of perspective. Similar to how it took everyone to get used to the Internet, Social Media etc., it will take a while to get used to Snapchat. Furthermore, there is a lack of tooling around Snapchat which has made matters worse. That said, those who can grasp this and figure it out...they are in for a treat.

Obviously, what I've written above is my take on Snapchat (both as a user and as a someone who loves technology). It's completely arm-chaired CEO talk but I'm interested in what people have to say/think about it.

[0] https://techcrunch.com/2016/11/15/snapchat-has-reportedly-fi...

[1] http://www.businessinsider.com/how-much-time-people-spend-on...