Since Facebook announced last week that it would be acquiring WhatsApp for $16+ billion, pundits have been trying to make sense of the deal. How can a messaging app startup be worth so much more than say, Motorola Mobility, which has thousands of employees?
According to Mark Zuckerberg, it’s not. It’s worth more. Speaking at Mobile World Congress in Barcelona yesterday, the CEO said that WhatsApp was a ‘great fit’ for his company and that it was worth more than the $19B ($16B + $3B in vested shares) they paid for it…
Facebook Inc. (FB) Chief Executive Officer Mark Zuckerberg said WhatsApp Inc., which his social-media company agreed to buy last week, was “worth more than $19 billion. The mobile-messaging startup was “a great fit for us,” Zuckerberg said at the Mobile World Congress in Barcelona yesterday. “Already almost half-a-billion people love using WhatsApp for messaging and it’s the most engaging app we’ve ever seen exist on mobile by far.”
The acquisition, which consists of $4 billion in cash, $12 billion in Facebook shares, and $3 billion in shares that will vest over the next several years, is the largest ever by the 10-year-old Facebook. It’s also the most expensive for an Internet company since the early 2000’s.
“WhatsApp is well on its way to connecting 1 billion people, Zuckerberg said, and few services in the world attain that reach without becoming valuable. WhatsApp has more than 450 million users a month.
“I think by itself it’s worth more than $19 billion,” he said. “It’s hard to exactly make that case today because they have so low revenue. … I could be wrong—there is some chance that this is the one service that gets to a billion people and ends up not being that valuable—[but] I don’t think I am.”
Will Mark’s gamble pay off? Who knows. It doesn’t sound like he’s interested in putting ads in WhatsApp or raising its subscription fee of $1 per year, so monetization is still a major question. But I guess if nothing else, it makes for one less messaging competitor to worry about.
What do you think?