Snapchat. (Duncan Alfreds, Fin24)
San Francisco - The prospect of tens of thousands of potentially racy Snapchat photos hitting the internet has driven home a simple fact: The mobile app's core feature - delivering photos and videos that vanish seconds after viewing - is flawed.
The negative publicity surrounding that speculation has spurred criticism about its lax security. But whether this will affect the valuation of the 3-year-old Silicon Valley start-up as it seeks another round of funding remains to be seen.
A range of venture capitalists and tech insiders say they believe it will not, for now.
One person close to the company's fundraising efforts who asked not to be named said Snapchat is still expecting a $10bn valuation in the current funding round, one of the start-up industry's richest and the same level being considered by investors before news of the breach surfaced last week.
"Once a company is hot, investors will be keen to continue investing unless the issue seems to be life-threatening," said Anand Sanwal, CEO of venture capital consultancy CB Insights.
The brouhaha has not yet hurt the popularity of Snapchat among teenagers, partly because no mass publication of leaked photos has materialised.
The messaging service remained among the five most-downloaded photo and video apps over the weekend, according to analytics service App Annie.
The issue arose last week when hacker forums claimed unknown parties had created a file holding at least 100 000 stolen Snapchat photos, including many of minors, that could end up being posted online. The anticipated event, dubbed "the snappening", was widely reported.
While Snapchat said its servers were not breached, it confirmed that rogue third-party apps have been storing its users' pictures. That points to a longer-term challenge for the Los Angeles company: Its inability to fully block the external parties it blames for undermining its business.
Even before any talk of "the snappening", security experts were faulting Snapchat for what they call a cavalier approach toward privacy, which may have given users a false sense of comfort.
The third-party apps, which allow users to enter their Snapchat password and log-in information, connect to the main service and provide unauthorised features such as image saving.
Such software can be pernicious since the people whose pictures are stored are often unaware of the privacy breach by the downloaders of the third-party apps.
Snapchat does not allow other apps to interact with its service, but many developers manage to break the rules. The company says it monitors for such "illegal" apps and has succeeded in removing some culprits from Google and Apple app stores.
One website, Snapsaved.com, claimed on Monday on its Facebook page that its servers had been hacked and that intruders had accessed its trove of Snapshot photos.
Still, Snapchat may have little to worry in the near term, at least on the valuation front, industry insiders say.
David Cowan, a partner at Bessemer Venture Partners, which has not invested in Snapchat but has backed other consumer startups like dating service Zoosk and online bulletin board Pinterest, said Snapchat has little to worry about.
"These types of breaches will definitely stop people from using Snapchat, until they have a really cool picture to share," Cowan said.