WhatsApp: A $19 billion bet for Facebook
NEW YORK — Facebook is placing a $19 billion bet on reaching its next billion mobile users with the acquisition of WhatsApp, a popular messaging service that lets people send texts, photographs and videos on their smartphones.
The $19 billion deal is by far Facebook’s largest and bigger than any that Google, Microsoft or Apple have ever done. But it is likely to raise worries that Facebook and other technology companies are starting to become overzealous in their pursuit of promising new products and services, said Anthony Michael Sabino, a St. John’s University business professor.
“This could be seen as a microcosm of a bubble,” Sabino said. “I expect there to be a lot of skepticism about this deal. People are going to look at this and say, ‘Uh-oh, did they pay way too much for this?’”
Facebook, for its part, is taking the long view. WhatsApp has 450 million monthly users, 70 percent of whom use it every day. The service is adding a million new users a day. There are 19 billion messages sent and 34 billion received via WhatsApp each day, in addition to 600 million photographs and 100 million video messages.
At this rate, Facebook CEO Mark Zuckerberg is confident the app will reach a billion users. Services that reach that milestone, Zuckerberg said in a statement, “are all incredibly valuable.”
It’s an elite group to be sure — one that includes Google (which owns YouTube), Facebook itself and little else.
Facebook said Wednesday it’s paying $12 billion in stock and $4 billion in cash for WhatsApp. In addition, the app’s founders and employees — 55 in all — will be granted restricted stock worth $3 billion that will vest over four years after the deal closes.
The transaction translates to roughly 11 percent of Facebook’s market value. In comparison, Google’s biggest deal was its $12.5 billion purchase of Motorola Mobility, while Microsoft’s largest was Skype at $8.5 billion. Apple, meanwhile, has never done a deal above $1 billion.
