Big Deal: Facebook buys WhatsApp for $19 Billion - Bargain?

tonester on 21/02/2014 - 02:14

When Facebook offered to buy Snapchat last year for $3 billion, the messaging app turned Facebook down. So this time, Facebook made it harder for its target to say no. On Wednesday, Facebook announced it would acquire WhatsApp, a text messaging application with 450 million users (growing by 1m/day with 72% active every day), for at least $16 billion in cash and stock, its largest acquisition by far and one that represents a new height in the frenzy to acquire popular technology start-ups.

Facebook will pay $4 billion in cash (35% of its holdings) and $12 billion worth of Facebook stock, with an additional $3 billion in restricted stock units granted to WhatsApp employees and its founders, which would vest over the next four years and raise the cost of the deal to $19 billion. The price was decided in five days, the deal completed over eleven.

By some metrics, the cash and stock being paid for WhatsApp make it among the richest deals of all time. With 55 employees, WhatsApp is commanding a price equivalent to $344 million an employee, or about $28 a user.

WhatsApp has just 32 software engineers, which means that each one supports some 14m users. And the volume of 50 billion messages a day it is handling is said to be the equivalent of all the SMS messages transmitted by the world’s telecoms companies.

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jdf on 21/02/2014 - 08:32

Interesting reading, thanks for putting it all in one place.
scotty on 21/02/2014 - 10:31

I stopped using WhatsApp after learning about its patchy security in the past. So count me out from that 450 million :)

Do note that WhatsApp is a $50 million revenue company that's actually profitable (yeah I know it seems to be a rare breed amongst the startups over there in Silicon Valley), that already makes it a bargain comparing to Instagram (which Facebook bought for $1b) and Snapchat (which Facebook was trying to buy), which neither have a revenue model.

However — this is something that's often debated on OzBargain — buying something cheaper (or give you better return) does not necessarily mean a "bargain". Sometimes NOT BUYING would actually save you more.
- bossmode on 21/02/2014 - 11:17
  
  +1
  
  What are you using now? I've been on it since it came out because I'm too fond of the simplistic interface it offers.
  - scotty on 21/02/2014 - 14:00
    
    Good ol' SMS. Back in my PAYG days I used to use cheap overseas TXT gateway like FishText. Now I am on a cap plan and I usually have more credit than I know what to do with them.
Unorthodox on 21/02/2014 - 12:20

I like whatsapp and hope it doesn't become an ad based system.

I've already paid up until 2015 so I hope I don't need to suffer from awful changes.
- ubor on 21/02/2014 - 22:22
  
  +1
  
  Just wonder how much you paid. I having been using it free of charge for more than a year now.
pikapika on 21/02/2014 - 12:48

+2

I'm rather annoyed that WhatsApp has been purchased by FB and if they do any major changes to it I will be moving completely away from it. Like Skype since MS has owned it I've found the quality has been dropping more and more.

Big Deal: Facebook buys WhatsApp for $19 Billion - Bargain?

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