As it stands, Snapchat does not generate any revenue. They receive funding from investors who are concerned not in the company's revenue, but the customer base, which is why Snapchat's valuation of $10 billion is so high.
More than 50% of Snapchat's users are between the ages of 13 and 17, a demographic which is highly sought after by marketers. And Snapchat looks set to continue growing, because although it's service seems like a novelty, at it's core it is a social network, alerting you that friends and contacts want to connect with you.
There is a proven history of social networks consistently increasing their user base, and providing this trend continues, you would imagine, so will the investments.
This could explain why Snapchat's CEO rejected a $3billion bid from Facebook a matter of months ago. He saw the growth potential, and seems to have been proven correct.
