Facebook buys WhatsApp for a measily $16B!

Crazy, but it is true.

http://newsroom.fb.com/News/805/Facebook-to-Acquire-WhatsApp

$16.000.000.000.000.00

Is that like not totally surreal? There are too many zeros there.

Here is another interesting article.

http://sequoiacapital.tumblr.com/post/77211282835/four-numbers-that-explain-why-facebook-acquired

0 money spent on marketing. That is actually how it should be.

Scott

 

Sorry, it is actually $19B!

I missed the $3B in stock options. Basically, every employee (all whopping 50 of them) is now a millionaire or will be, if they stick with the company for the next 4 years. If they all had options in WhatsApp, then they are most likely millionaires right now. The founders are most likely directly billionaires. Unbelievable for just under 5 years of work, isn't it?

Scott

 

sounds like a sweet deal to me

 

Good question. It is hard to believe the app can bring in that kind of ROI even mid to long term. I've read the value of the company is currently about $2-4 Billion, so Facebook is betting for some serious growth. A mistake? Possibly.

Scott

 

WhatsApp costs money. $0.99 a year per users. So it makes money. I remember my son ranting about them wanting money, because it was free at first, but he ended up paying, simply because it is much cheaper and much better than SMSes. I don't use the service myself.

Scott

 

Sheesh, if they could actually get 2 billion people to use this app for maybe around 10 years, they'd just then be breaking close to even.

 

Yeah, the math for a normal human being doesn't really seem to add up very well. If you are interested in the dry reading about how M&A and company valuations are made, this is a pretty good article. Despite reading the article though, I am still having a hard time fathoming how Facebook will get their returns on investment.

Edit - this is funny.

A premium of 475 - 950% is like friggin mad.

Scott

 

Well in Germany Unabhängige Landeszentrum für Datenschutz is saying to not use WhatsUp anymore and o for another like Threema en MyEnigma.

 

Its just beyond imagination. They are (or in short time will be) bilionaires. Nice that theyv dont have to worry how to pay bills and things, but not nice as it comes to friends. The richer you are, the less real friends you have.

 

Congrats to the developers but I don't understand the economics of it. The valuation is way off base IMHO

 

Sounds like a huge buy out price for no reason. Possibly, so google and others wouldn't grab it.

 

Seems a lot like Facebook have more money than sense right now. Think it is just a way of keeping things in favor of them. I know when they purchased Instagram it was because they wanted to use the features they had to improve Facebook's way of handling images. Perhaps this is the same for improving the way they handle messages.

 

The main reason is that they now have complete profiels of people, most did not give there phonenumber now they have complete access to that.

 

Still, even with "more complete profiles", any piece of data alone won't get you returns on investment.

I guess Facebook knows more about their intentions than I can fathom. Thus, for me, the price is still quite mind boggling. The 1B for Instagram seemed high to me, but now looks like peanuts.

This article has a good list of reasons for the buyout, but still no "this is how FB will get their money back" answers.

Scott

 

Agreed the valuation / price paid seems very high