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

Post by ulfw » Wed, Feb 19, 2014, 11:37 PM UTC

flyinglizard wrote: post #176

josh2600 wrote: post #104

For everyone saying this is a waste of money, consider the commentary around Instagram at $1B. Basically the world said that this was a horrible acquisition at the time, but in retrospect, buying Instagram was quite cheap. Buying your closest competitor for less than 15% of your market cap is usually a good idea. Fast forward to today. What'sapp is the dominant messaging application across the world. Carriers hate it…

Your argument makes perfect sense when you're talking about real companies, with R&D, marketing, technology and all that. GM buying Tesla for 15% of its worth might make sense. But in the social space, companies are entirely seasonal, the barriers to entry are none, there's no way to predict user traction or behavior. I understand this is how Facebook intends to keep itself at the top of the social heap, but with rec…

Post by antrix » Wed, Feb 19, 2014, 11:38 PM UTC

tomkarlo wrote: post #249

mschuster91 wrote: post #155

Earlier quoted context omitted.

The lock-in is the network effect, and well, if you're aiming for 1-1.5B users (which can be served with virtually no employment and hosting costs) you're looking at 1B $ yearly profit .

Not sure how you're figuring that. At best - 1.5Bn users locked in - you're at less than $1bn _revenue_ (after you net-out the 30% that goes to Apple or Google for an in-app transaction) and much lower net profits (presumably, it costs some fraction of a dollar in ops, bandwidth and cpu to support a paying user for a year.) Also, even at $1bn in revenue, this is 16X sales... that's usually the kind of price you'd see…

Post by to3m » Wed, Feb 19, 2014, 11:39 PM UTC

qqg3 wrote: post #308

Silhouette wrote: post #260

Earlier quoted context omitted.

They are the de-facto messaging service in the rest of the world (except for China). FWIW, I'm in the UK, and I'm not aware of anyone who uses it here, either. I too have heard the name mentioned once or twice in the past, usually for undesirable reasons related to things like security or privacy. Even looking them up today, I don't quite see the attraction: what is the USP here?

Bullshit, I'm in the UK, everybody I know uses WhatsApp.

Post by debt » Wed, Feb 19, 2014, 11:40 PM UTC

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.

Post by jng » Wed, Feb 19, 2014, 11:41 PM UTC

philp wrote: post #182

notahacker wrote: post #149

Earlier quoted context omitted.

Destroy? There will be a host of new messaging startups created off the back of this, and suddenly the Snapchat valuation looks sane. Do one thing that Facebook does but better is the new gold rush. Sure, most of them will fail hard without raising a cent in revenue, but others will start to threaten to chip away at Facebook's market share.. Anecdata: I get a lot more messages on FB messenger than WhatsApp...

Whatsapp has virtually no market share in the US. In basically all markets outside of the US, however, they are dominating the messaging space. Text messages in major EU countries like Germany and France have been almost completely supplanted by WhatsApp.