So, it seems to me it's not a financial instrument. I mean, my understanding of finance is pretty basic. There could be instruments that represent what I'm describing. What I'm seeing, though, is that they're buying a market (users) w/ cross-selling opportunities, reduced liabilities if patents, and proven tech if they want it. It's more like investing in themselves through a third party they're bringing in for the enhancements they'll provide.
In that case, any premium paid that isn't reclaimed by future value created as a result of the acquisition is destroyed wealth. Unfortunately, without a crystal ball, it's hard to say what that premium is, if it exists at all.
Hell, I invest in options often. There's no real value to me... only a potential investment payout.
I think it's the same with most investors of technology.
Maybe snapchat is going to be a crucial marketing channel for them, which makes it worth it to purchase them. They transfer some of this value, to the original investors of the company who got it off the ground.
There is value, or perceived value at some point in the chain.
"When a startup doesn’t have an underlying business model that will eventually produce real revenues and profits, and the only way for its founders to get rich is to sell to another company or to investors, you have to ask yourself whether that startup is really just a financial instrument, not that dissimilar to the CDOs of the 2008 financial crisis — a way of extracting value from the economy without actually creating it."