More on Facebook/WhatsApp


Facebook (FB) is paying $4B in cash and issuing $12B in stock (183.9M shares) for WhatsApp. The company is also issuing $3B worth of restricted stock units that vest over four years, leading to a total potential acquisition price of $19B. For reference, Facebook's market cap is currently at $165B.

Facebook states WhatsApp now has 450M MAUs, 70% of whom are active on a given day, and that its messaging traffic is approaching global SMS volumes. Mark Zuckerberg declares the startup, which relies on a phone's contact book to connect users with each other, is "on a path to connect 1 billion people."

Much like Instagram, WhatsApp will maintain a measure of independence from Facebook. Co-founder/CEO Jan Koum will join Facebook's board.

WhatsApp only employed 50 people as of January. The startup has taken a cautious approach to monetizing its service (no ads for now), though it does charge users $0.99/year after providing a year of service for free.

The deal comes with a hefty $2B termination fee ($1B apiece in cash and stock). CC at 6PM ET. FB now -4.5% AH.

Previous: Facebook buying WhatsApp

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Comments (25)
  • LYogi
    , contributor
    Comments (3095) | Send Message
     
    wow FB could have bought BBM for a fraction of that....

     

    or could they have ;)

     

    Blackberry to the moon, Alice!
    19 Feb 2014, 05:31 PM Reply Like
  • TyHub
    , contributor
    Comments (30) | Send Message
     
    Had to get a "short" comment about BBRY in a comment forum today, eh Yogi!
    20 Feb 2014, 02:49 AM Reply Like
  • LYogi
    , contributor
    Comments (3095) | Send Message
     
    the market seems to agree with me so far....FB down 3.6%
    20 Feb 2014, 07:51 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (10962) | Send Message
     
    Dorm room conversation in February 2024:

     

    "Hey...you guys remember 'Facebook'?"

     

    "Oh yeah...my mom used to look at that when I was kid. I thought they went out of business a few years ago?"

     

    "They did...I was just thinking about old-timey websites from back in the day."
    19 Feb 2014, 05:35 PM Reply Like
  • Snoopy1
    , contributor
    Comments (1124) | Send Message
     
    I agree. The fact that FB had to buy WhatsApp shows how fragile the FB business model is.
    19 Feb 2014, 06:07 PM Reply Like
  • monfrere
    , contributor
    Comments (719) | Send Message
     
    This has to open people's eyes that Facebook's value is not sustainable right? Surely people will rebel at the concept of Facebook spending investors $19B on this ridiculousness? Unfortunately for Facebook, their own absurd valuation is leading them to have to pay equally absurd valuations to keep competition at bay. The difference is that there is no greater fool for Facebook except the market and eventually the market will catch on. We are approaching midnight dear Oracle, everyone run for your coaches!
    19 Feb 2014, 05:47 PM Reply Like
  • SoldHigh
    , contributor
    Comments (991) | Send Message
     
    Reminds me of YHOO/Geocities, Hp/PALM, SpintNextel....

     

    ...but worse.

     

    Posterity will view FB/WHATSAPP as WAY worse. Stupid FB.
    19 Feb 2014, 05:55 PM Reply Like
  • DanoX
    , contributor
    Comments (3419) | Send Message
     
    HP, was worse Compaq @ 25 billion, Autonomy @ 12.5 billion, Palm was small potatoes at 1.2 billion.
    19 Feb 2014, 07:57 PM Reply Like
  • TyHub
    , contributor
    Comments (30) | Send Message
     
    I like it!!
    20 Feb 2014, 02:26 AM Reply Like
  • celebritydave
    , contributor
    Comments (67) | Send Message
     
    Ive been using Whatsapp for at least 2 1/2 years. Never had to pay a cent. Must be cause i upgrade my phone.

     

    Ad's will ruin it, people will just switch to another ad free messenger.

     

    FB stock is scary at these levels IMHO. Wouldnt touch it.
    19 Feb 2014, 06:11 PM Reply Like
  • DanoX
    , contributor
    Comments (3419) | Send Message
     
    Apple is frugal with mergers and criticize for it, Facebook spent an incredible amount of money 19 billion for nothing.
    19 Feb 2014, 08:00 PM Reply Like
  • alext1379
    , contributor
    Comments (785) | Send Message
     
    Doesn't FB messaging work the same way?
    Doesn't seem to make sense to me that they'd buy another messaging app when they already have one except to keep it away from others.

     

    As mentioned above, they could have bought BBM and plus all of BB for less (thinking patents).
    19 Feb 2014, 08:17 PM Reply Like
  • tncopdoc
    , contributor
    Comments (2) | Send Message
     
    Facebook already stores too much of our personal conversations, photos and etc. I don't trust them with access to my contact list (that's everyone one your phone) and any messages I may send. Time to delete Whatsapp
    19 Feb 2014, 11:11 PM Reply Like
  • Madbook
    , contributor
    Comment (1) | Send Message
     
    does he know difference between Million and a Billion ? I doubt it.
    19 Feb 2014, 11:11 PM Reply Like
  • tncopdoc
    , contributor
    Comments (2) | Send Message
     
    Facebook does not need it's hands on my contact list and the data therein. Time to delete Whatsapp!
    19 Feb 2014, 11:13 PM Reply Like
  • liusing
    , contributor
    Comments (1003) | Send Message
     
    Users' base is the key, 450M existing users is difficult to pull over by any App, even it may be a better one. You can delete and change your messenger app anytime, but you need all your contacts to follow, and that's not possible unless the App makes everyone hate it so much (like paying a big fee).

     

    That's how Google cannot get in the door of FB's area for so many years, Zuck knows that very well, he also knows FB is fading. So it is a good move, but how to make money out of Whatsapp to pay for the purchase is yet to see.

     

    My Whatspp account requires me to pay about $1 a year to continue service starting July, I don't like it but guess I have to pay as I depended on it so much already.
    20 Feb 2014, 02:45 AM Reply Like
  • B1LO
    , contributor
    Comments (7) | Send Message
     
    All the critical comments here pre-suppose one thing: that Facebook hasn't carefully considered it's objectives for this acquisition. Whereas In reality, Zuckerberg has proven his business savviness again and again.
    19 Feb 2014, 11:15 PM Reply Like
  • monfrere
    , contributor
    Comments (719) | Send Message
     
    You're argument is borderline religious. It is our job to look at the deal and make our own decision. Lot's of bad deals have happened throughout history, especially by big companies led by smart people. "In Mark we trust" will not become SAs new motto.
    20 Feb 2014, 08:32 AM Reply Like
  • bennythebull
    , contributor
    Comments (134) | Send Message
     
    I have been long facebook stock and hundreds of leaps since $24. History always seems to repeat itself with this company,the CEO does something big and the company is ''out of business''. Listen the reason why zuck bought this company is india,this company is adding 250,000 users and day from india. This is the smartest thing fb has done so far ,the money means nothing and the stock will just be absorbed by the market and wont be sold for 10 years anyway.We basically paid half what they would have gotten if they went public. Again this will shake out some week longs and back up we go.FB really does not care about short term moves in stock and time their own corrections. This stock goes a lot higher.
    20 Feb 2014, 12:41 AM Reply Like
  • TyHub
    , contributor
    Comments (30) | Send Message
     
    What's a few billion to Zuck to invade millions of subscribers privacy, yet he does protect his, after spending 55 or so millions to buy the homes around his. Go Zuck!
    20 Feb 2014, 02:41 AM Reply Like
  • Bull Rider
    , contributor
    Comments (552) | Send Message
     
    It is cheap. Facebook actually paid 4 billion in cash and the rest in stock. 19 billion with 2 billion in breakup fees. Forget the stock as that is probably locked up and is accounted for but the cash payment is actually equivalent to 1,5 usd per Facebook shareholder or 2.2% like a dividend. The stock should open approximately 2.2% or more down. The deal at 4 billion is cheap the rest is paper millionaires, what dreams are made off. How do you monetize this who cares, everyone's uses what's app!
    20 Feb 2014, 04:31 AM Reply Like
  • monfrere
    , contributor
    Comments (719) | Send Message
     
    you cant have it both ways. Either the stock is worth $66 or it isn't. It can't be worthless paper when you use it to acquire something and appropriately valued equity when you are an investor buying stock.
    20 Feb 2014, 08:35 AM Reply Like
  • Erdal Y
    , contributor
    Comments (52) | Send Message
     
    I don't trust this Nerd Zuck. He created facebook by hacking into his university's database to steal photos and sensitive data from hot girls to do god knows what in his dark room. Now he wants me to trust him with my confidential info and
    contact list? No way. Delete whatsapp.
    20 Feb 2014, 07:30 AM Reply Like
  • cpreid21
    , contributor
    Comments (2) | Send Message
     
    Haha, well said.
    14 Apr 2014, 03:25 PM Reply Like
  • calikym
    , contributor
    Comments (257) | Send Message
     
    I read that everyone in Israel uses it...and most of the adopters of wassup are in Israel. Maybe it is a more secure app?? Obviously there is something more here than meets the eye.
    20 Feb 2014, 08:47 PM Reply Like
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