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BlackBerry's (NASDAQ:BBRY) BBM has been available on Android and iOS for nearly two months now. It has been one of BlackBerry's few successes recently and has performed better than many analysts thought, firmly establishing itself as a serious player in the messaging app universe. We are going to take a look at how BBM ranks against some competitors in select markets and what that means for its valuation.

Apple App Store Rankings (iPhone)

BBM is still doing very well in Apple's App Store, maintaining a top ranking in BlackBerry's strongest markets such as Canada, the UK, the Middle East, Africa, Southeast Asia and parts of South America. Of the 153 markets tracked, BBM is a top 100 app in 72 countries and a top 10 app in 42 countries.

To put things in perspective, to get into the top 25 free apps in the UK requires approximately 8,000 downloads per day, which is approximately 2.9 million downloads per year at that run rate. BBM's current ranking implies a download rate of 3 to 4 million downloads per year in the UK.

BBM's performance is weaker in places such as the United States and Western Europe (excluding the UK). However, its US ranking still likely translates into a couple million downloads per year from the US alone.

Country

BBM

Kik

WhatsApp

Viber

Snapchat

Argentina

4

306

7

87

18

Canada

19

91

35

74

13

France

181

260

24

44

6

India

19

261

2

22

116

Indonesia

3

207

6

142

48

Malaysia

36

277

4

32

213

Mexico

36

245

5

68

57

Saudi Arabia

4

27

2

61

12

South Africa

2

265

3

26

38

UAE

3

38

1

9

10

United Kingdom

17

95

8

51

13

United States

203

31

30

73

8

Source: App Annie

Google Play Store Rankings

Generally BBM has a higher rank in Apple's App Store compared to Google Play. BBM still performs very well in BlackBerry's strongest markets, but is still behind WhatsApp, which is the top app in many markets. BBM usage on Android phones should be helped by the deal to preload BBM onto phones from 12 low-end Android vendors.

Overall, Google Play has 25% more downloads than Apple's App Store now, but only monetizes 50% as well as Apple's App Store overall. Google Play is becoming increasingly important for download numbers, but any BBM monetization is likely to be stronger with iOS due to its stronger ranking and the higher monetization levels of the Apple App Store.

Country

BBM

Kik

WhatsApp

Viber

Snapchat

Argentina

24

454

1

119

287

Canada

17

57

11

20

9

France

472

328

20

24

8

India

73

405

1

19

>500

Indonesia

1

>500

3

161

420

Malaysia

68

>500

3

15

>500

Mexico

172

>500

1

42

322

Saudi Arabia

8

52

1

5

56

South Africa

3

353

1

20

132

UAE

8

52

1

5

56

United Kingdom

35

51

3

17

13

United States

472

328

20

24

10

Source: App Annie

Monetization and Valuation

Currently we are in the dark as to how well BBM will monetize in the future. Competitors such as WhatsApp monetize by charging users $0.99 per year, but there is the potential for greater monetization that could add up to significant sums with hundreds of millions of users.

Rumors had Google making a $1 billion bid for WhatsApp in April 2013. This would have valued WhatsApp at $3 to $4 per user at the time. However, WhatsApp denied that they were discussing a sale with Google, so we are not actually sure how much WhatsApp could garner in a sale, and it could be worth significantly more than that.

Snapchat rejected a $3 billion offer from Facebook. It is unknown how many users Snapchat has, but some estimates put it around 100 million installs, which would value it at around $30 per user. This is similar to Instagram's valuation per user when Facebook purchased it for $1 billion.

Kik just announced that it reached 100 million users and are adding 200,000 new users per day. They raised $19.5 million in Series B funding in April 2013 at a time when it had 50 million users. Although Series B valuation was not disclosed, giving up approximately 10% of the company in that round would make Kik worth $200 million or $4 per user at that time.

Viber was growing at 400,000 users per day earlier this year. It appears the BBM's store rankings are closer to Viber than Kik's, so BBM may be adding users at a rate of 400,000 per day, or 146 million per year.

BBM could end up with 250 million users (including users on BlackBerry devices) by early 2015. At $4 to $5 per user, that would put BBM's value at $1 billion to $1.25 billion at that time. Valuing it at $4 to $5 per user seems more appropriate than Snapchat's $30 per user due to BBM's relative weakness in the United States and most of Western Europe. If BlackBerry finds ways to monetize BBM successfully, then the value could go up substantially as seen with Japan's Line messaging app.

Conclusion

BlackBerry is likely going to face a bumpy road over at least the next year as it attempts to restructure amidst continued heavy losses. There is a lot of uncertainty about whether John Chen's plans to refocus on the enterprise will succeed given that BlackBerry is still burdened by a deeply unprofitable handset division. However, BBM's early success gives BlackBerry another valuable asset. At current adoption rates, BBM could be worth over $1 billion by 2015, and perhaps significantly more depending on monetization efforts.

BlackBerry remains a speculative play. It has quite a few valuable assets, but is also likely facing an extended period of significant cash burn as it attempts to refocus on the enterprise. Any investors in BlackBerry need to be prepared for a very wide range of potential outcomes at this point.

Disclosure: I am long BBRY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am retaining a small position in BlackBerry to see how the turnaround effort plays out.

Source: BlackBerry: Projecting BBM Downloads And Valuation