Maybe the valuation is based on the number of ransom-able pics in their database. :)
Can twitter turn a bunch of garbage impressions into cash? Yes.
Can snapchat turn a bunch of garbage impressions into cash?
Indeed, much of their expenses are for trying to grow as fast as possible, and cutting those could leave the potential for profit - but the entire premise of companies like this is that the potential earnings are unknown (but presumably high), thus they need to throw everything they have at it until they can find the kind of monetization they're looking for. I don't see it happening.
I wouldn't consider Facebook in the same group as Twitter/Snapchat.
EDIT: Additionally, their rumored "news network" (http://www.theverge.com/2014/8/20/6049007/snapchat-discovery... b/c the original article is paywalled) is said to have advertising as well. No mention on how/if it's going to be targeted, but I wouldn't be surprised if they come up with something interesting.
Gary Vaynerchuck had an interesting point in one of his many many interviews. Basically SnapChat is instant focus, you cannot see an ad and file it away for later, you must act on it before it disappears. That functionality may be important to some advertisers.
Me I joined SnapChat and have never received one naked selfie so I never use the app. I guess that use for it created a lot of the user base. I do not know how much I would value the app because of that and how scalable their user base is, and their tech is easily replicated.
what? and what all these photos tell about the users if not their interests and personal details?! :)