Facebook bought Instagram for $1 Billion in 2012, and now they are buying WhatsApp for $16 Billion, sort of. The total as I understand is an initial $12 Billion in stock and $4 Billion in cash, then $3 Billion that vests over 4 years. So that is $19 Billion in total.
For those of you that do not use WhatsApp, here is how the now $16 Billion dollar acquired company describes their service:
How it works…WhatsApp Messenger is a cross-platform mobile messaging app which allows you to exchange messages without having to pay for SMS. WhatsApp Messenger is available for iPhone, BlackBerry, Android, Windows Phone and Nokia and yes, those phones can all message each other! Because WhatsApp Messenger uses the same internet data plan that you use for email and web browsing, there is no cost to message and stay in touch with your friends. In addition to basic messaging WhatsApp users can create groups, send each other unlimited images, video and audio media messages.
Is Mr. Zuckerberg Crazy?
Maybe, maybe not. Let’s look at some of the knowns. He has to maintain market leadership. His stock has done well lately and one could argue it is in large part due to their mobile revenue. If that is the case and mobile growth as well as market leadership are two of their many goals, then WhatsApp may have been a bargain. Here are some WhatsApp numbers, 450 million active monthly users of which 70% are active on any given day. Wow. Here are some Facebook numbers from September 2013, 1.19 billion active monthly users and 728 million daily active users. In comparison form:
1.19 : Billion Active Monthly Users
728 : Million Active Daily Users
$171 : Billion Market Cap as of today 2/20/14
$143 : Value of Each Active Monthly User
$234 : Value of Each Active Daily User
450 : Million Active Monthly Users
315 : Million Active Daily Users
$16 Billion : Sold ($19 Billion including the $3 Billion vesting for 4 years)
$35 : Value of Each Active Monthly User
$50 : Value of Each Active Daily User
Note on User Value Calculations: there are other factors to take into account, such as a big one – Revenue. However it gives a rough comparison of value based solely on active users.