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Facebook Buying WhatsApp for $16B in Cash and Stock Plus $3B in RSUs

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Re: Facebook Buying WhatsApp for $16B in Cash and Stock Plus $3B in RSUs

#381

Post by pbhjpbhj »

orbifold wrote: post #229
kayoone wrote: post #145

Earlier quoted context omitted.

why ? viber and whatsapp are still there and will be in the future, i dont see new room for a messaging app.

Some years ago the dominant messaging apps were icq and aol messenger and msn messenger. I think almost every new generation just uses their own messenger.

Presumably IPv6 will be a major change - that will allow every person to have an IP address for every device they have and retain that perpetually. Then we can have true direct messaging and use open protocols (XMPP?) each person choosing a client to manage their end; like how email works now.

If you can send from Whatsapp to FB messenger, Viber, Skype and whatever - and vice versa - that's surely going to democratise messaging?

Re: Facebook Buying WhatsApp for $16B in Cash and Stock Plus $3B in RSUs

#382

Post by selectodude »

tomblomfield wrote: post #81

Sequoia just landed a 5x return on their fund with this one deal. At a rough guess, they put in $8m for 15% of the company in 2011, valuing it at around $53m. A $16B sale is a 300x increase in value, so Sequoia's stake is worth $2.4bn. Their standard fund size is around $500m. http://www.reuters.com/article/2013/08/16/us-sequoia-funds-i...

Not too bad for the two founders then. 6.8 billion dollars each.

Re: Facebook Buying WhatsApp for $16B in Cash and Stock Plus $3B in RSUs

#383

Post by jacklionheart »

hackinthebochs wrote: post #184
nwh wrote: post #60

400,000,000 active users [0] 16,000,000,000 USD ---- $40 per user That's an incredible cost. We can assume Facebook is paying for the userbase, the app itself and it's infrastructure would basically run itself. It's less appealing when you realise that there's probably a miniscule fraction of WhatsApp users that don't have a Facebook account. > WhatsApp will remain autonomous and operate independently. You can contin…

I conjecture that this price is a reflection of the fact that facebook realizes their stock is way overvalued, and so they used this opportunity to make a huge purchase which would be too expensive otherwise. The fact that a huge amount of the purchase price in stock is a strong signal for this. These same sorts of deals happened in the first internet bubble (although this is clearly different as there is also a huge…

This doesn't make much sense to me since most of the transaction was in cash.

Re: Facebook Buying WhatsApp for $16B in Cash and Stock Plus $3B in RSUs

#384

Post by orbifold »

erikpukinskis wrote: post #312
orbifold wrote: post #229

Earlier quoted context omitted.

Some years ago the dominant messaging apps were icq and aol messenger and msn messenger. I think almost every new generation just uses their own messenger.

I think the number of active users is what makes this comparison invalid. At the time of AOL's acquisition of ICQ it had 20 million active users¹. WhatsApp has 430 million. In order to eclipse WhatsApp, a competitor would have to get substantially more than 10% of the entire global population. ICQ was dominant in its heyday, but the game wasn't won yet, so it was theirs to lose. In some sense that's still true: we ha…

I agree, but there are still a few things Whatsapp lacks, in particular convenient end-to-end encryption that might not be feature for the mass market, but is probably interesting for enterprises.

Re: Facebook Buying WhatsApp for $16B in Cash and Stock Plus $3B in RSUs

#385

Post by jacklionheart »

redthrowaway wrote: post #161
nwh wrote: post #60

400,000,000 active users [0] 16,000,000,000 USD ---- $40 per user That's an incredible cost. We can assume Facebook is paying for the userbase, the app itself and it's infrastructure would basically run itself. It's less appealing when you realise that there's probably a miniscule fraction of WhatsApp users that don't have a Facebook account. > WhatsApp will remain autonomous and operate independently. You can contin…

I suspect they're just trying to protect their market share in messaging, in the same way that buying instagram allowed them to protect their market share in image sharing.

Yes, but they've continued to invest in Instagram as a product. Will they do that here as well?

Re: Facebook Buying WhatsApp for $16B in Cash and Stock Plus $3B in RSUs

#386

Post by nilkn »

adventured wrote: post #366
nilkn wrote: post #310

Earlier quoted context omitted.

To be fair, WhatsApp has an incredible number of very active users. It's not like the companies in 1998/99 which had no revenue, no users, but spent millions on Super Bowl ads. That said, this is a staggering amount to pay. I'm not familiar with Facebook's financials, but I'm surprised they could even afford this. I'd chalk this up to Zuckerberg's paranoia about no longer being #1 and less to a bubble.

WhatsApp has no serious revenue, the valuation is similar to the dotcom bubble in financial terms. Companies in 1998/99 weren't lacking in users. ICQ was purchased for $400 million in mid 1998, and had over 80 million users a year later (over 100 million by 2001). It too was run by a thin team, of just 70 people total (quite the accomplishment considering the technology of the time).

Perhaps you're right. I was thinking more of companies like Pets.com and less of ICQ, though obviously ICQ is a much more direct analogue to WhatsApp today.

Re: Facebook Buying WhatsApp for $16B in Cash and Stock Plus $3B in RSUs

#387

Post by scrabble »

olegious wrote: post #243
robbiep wrote: post #219

Earlier quoted context omitted.

you mean $1 once when they first install it? the 'pay this amount' was a well known scam message

Android users pay an annual fee.

My first year free just ran out. They sent me a message that I get to continue for another year for free. It's hard to believe anyone pays for this.

Re: Facebook Buying WhatsApp for $16B in Cash and Stock Plus $3B in RSUs

#388

Post by smackfu »

adventured wrote: post #304
staunch wrote: post #170

Damn, Zuck is far more paranoid than I thought. He's going to have to come up with a better strategy than buying every company that presents a potential existential threat though. Especially at these prices! I actually think it wasn't such a bad idea to buy Instagram. He paid 1% for something that really could have killed him. But paying $16 billion here is pretty much surrender as far as I'm concerned.

Zuck should probably be fired (gracefully step-aside, courtesy of shareholder activist pressure, given his voting control) when Facebook is forced to do a $16 billion write-down on this. WhatsApp won't even be worth the cash they're paying for it when the music stops. They just bought today's version of ICQ for $19 billion. This acquisition leads me to believe Facebook is most similar to Yahoo at the peak of the dotc…

Heh, AOL bought ICQ for $287 million, and it had 12 million users. $24 per user.

Now AOL was really good at destroying companies though...

Re: Facebook Buying WhatsApp for $16B in Cash and Stock Plus $3B in RSUs

#389

Post by adventured »

curiousDog wrote: post #357

In comparison, the Airbus A380 cost $11bn to develop. Is this really wise capital allocation by the street? Imagine what valuable technology could be built with this money. I for one, sold my stock in facebook just now.

No it's not wise (regarding the cash), but then a large portion of the value isn't real and will never be real; it's bid-up paper trading at 100 times earnings. Swapping one piece of overvalued paper for another, is most of the deal (I'd take the FB paper personally, it at least has some earnings behind it). And keep in mind, this isn't capital allocation by the street, it's capital allocation by Zuckerberg, he controls Facebook. This crashes and burns, it's solely on his head.

Re: Facebook Buying WhatsApp for $16B in Cash and Stock Plus $3B in RSUs

#390

Post by trhway »

erikpukinskis wrote: post #312
orbifold wrote: post #229

Earlier quoted context omitted.

Some years ago the dominant messaging apps were icq and aol messenger and msn messenger. I think almost every new generation just uses their own messenger.

I think the number of active users is what makes this comparison invalid. At the time of AOL's acquisition of ICQ it had 20 million active users¹. WhatsApp has 430 million. In order to eclipse WhatsApp, a competitor would have to get substantially more than 10% of the entire global population. ICQ was dominant in its heyday, but the game wasn't won yet, so it was theirs to lose. In some sense that's still true: we ha…

>In some sense that's still true: we have another 4 billion people yet to join the game.

and tens of billions of various sensors, smart toasters/cars/milk cartons ... after that

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