gjangal Posted February 19, 2014 Share Posted February 19, 2014 http://www.usatoday.com/story/tech/2014/02/19/facebook-buys-whatsapp/5617657/ Texting app sold for 16B Link to comment Share on other sites More sharing options...
greenbriar Posted February 19, 2014 Share Posted February 19, 2014 Just as an aside, the only outside investor, Sequoia, made out like bandits on this deal: April 2011 investment: $8M Rough estimate of their stake now (assuming conservative 15% ownership): $2.4B 300x return in under 3 years. Link to comment Share on other sites More sharing options...
JSArbitrage Posted February 19, 2014 Share Posted February 19, 2014 How can this be justified in any way? I hope the lawsuits fly. Link to comment Share on other sites More sharing options...
Guest wellmont Posted February 19, 2014 Share Posted February 19, 2014 How can this be justified in any way? I hope the lawsuits fly. what lawsuits? everybody is happy after this deal. $fb shareholders are not exactly price conscious. In zuck we trust. Link to comment Share on other sites More sharing options...
jschembs Posted February 19, 2014 Share Posted February 19, 2014 How can this be justified in any way? I hope the lawsuits fly. what lawsuits? everybody is happy after this deal. $fb shareholders are not exactly price conscious. In zuck we trust. you're on fire on twitter wellmont Link to comment Share on other sites More sharing options...
beerbaron Posted February 20, 2014 Share Posted February 20, 2014 What is whatsapp? Nobody i know ever heard of it. Link to comment Share on other sites More sharing options...
alwaysinvert Posted February 20, 2014 Share Posted February 20, 2014 What is whatsapp? Nobody i know ever heard of it. I used it for a little while in 2010 or so for international messaging on my cell. But since imessage, fb messenger and skype app have erased this use area completely. I have no idea why it's still so widely used. Link to comment Share on other sites More sharing options...
fareastwarriors Posted February 20, 2014 Share Posted February 20, 2014 What is whatsapp? Nobody i know ever heard of it. I used it for a little while in 2010 or so for international messaging on my cell. But since imessage, fb messenger and skype app have erased this use area completely. I have no idea why it's still so widely used. Me either. There are so many messaging apps now. SnapChat WeChat KaKao Line probably bunch of other ones I missed Link to comment Share on other sites More sharing options...
mankap Posted February 20, 2014 Share Posted February 20, 2014 Facebook is after the installed base. Whats app has 1B users. It is very popular in India. Everybody uses whats app there. Link to comment Share on other sites More sharing options...
gokou3 Posted February 20, 2014 Share Posted February 20, 2014 What is whatsapp? Nobody i know ever heard of it. I used it for a little while in 2010 or so for international messaging on my cell. But since imessage, fb messenger and skype app have erased this use area completely. I have no idea why it's still so widely used. I love whatsapp, it's quick and reliable. Beats imessage because not everyone uses an iphone. Beats fb messenger because not everyone is on fb (especially people from China where fb is blocked). I heard of the other apps (SnapChat, WeChat, KaKao, Line) but don't use them. It's the network effect -- for me, at least. Not saying whatsapp is worth $16B though. But then, is FB worth $170B? Could just be one overvalued piece of paper exchanging for another similarly overvalued piece. Link to comment Share on other sites More sharing options...
Palantir Posted February 20, 2014 Share Posted February 20, 2014 Ok I need to start one of these apps. Link to comment Share on other sites More sharing options...
maxprogram Posted February 20, 2014 Share Posted February 20, 2014 Facebook is trading users valued at $170 for users valued at $40. This is a good deal as long as it's with Facebook's highly overvalued stock. I think Zuckerberg is a smart capital allocator and knows FB's primary income stream is built on a house of cards -- if he can trade a piece of this for growing, disruptive companies it's a great deal for FB. Link to comment Share on other sites More sharing options...
Grenville Posted February 20, 2014 Share Posted February 20, 2014 Facebook is trading users valued at $170 for users valued at $40. This is a good deal as long as it's with Facebook's highly overvalued stock. I think Zuckerberg is a smart capital allocator and knows FB's primary income stream is built on a house of cards -- if he can trade a piece of this for growing, disruptive companies it's a great deal for FB. He's using 4bln in cash. Don't know how much of that they raised at their IPO, but the whatsapp folks are smart for getting a good chunk as cash. Link to comment Share on other sites More sharing options...
rogermunibond Posted February 20, 2014 Share Posted February 20, 2014 Some of the Asian chat apps like WeChat, KakaoTalk, and LINE are approaching the 250+ million active user threshold. Puts a real asterisk under Tencent valuation which owns WeChat. Link to comment Share on other sites More sharing options...
Orange Posted February 20, 2014 Share Posted February 20, 2014 Not saying whatsapp is worth $16B though. But then, is FB worth $170B? Could just be one overvalued piece of paper exchanging for another similarly overvalued piece. This. There will eventually come a time when FB's valuation will no longer allow them this luxury, but for now, they might as well keep snapping up valuable tech companies using their overpriced pieces of paper. Link to comment Share on other sites More sharing options...
Grenville Posted February 20, 2014 Share Posted February 20, 2014 Not saying whatsapp is worth $16B though. But then, is FB worth $170B? Could just be one overvalued piece of paper exchanging for another similarly overvalued piece. This. There will eventually come a time when FB's valuation will no longer allow them this luxury, but for now, they might as well keep snapping up valuable tech companies using their overpriced pieces of paper. Thinking about it more, I agree. He's using stock to buy another base of users. It makes sense if you value the company based on users. A majority of FB's cash is from their stock sales. Link to comment Share on other sites More sharing options...
abcd Posted February 20, 2014 Share Posted February 20, 2014 It main purpose seems to be texting without paying $15 (or even $30) per month to your carrier. http://www.usatoday.com/story/tech/2014/02/19/what-is-whats-app/5621175/ Link to comment Share on other sites More sharing options...
beerbaron Posted February 20, 2014 Share Posted February 20, 2014 I have to disagree with the statement that it's a good move if FB is using shares. Taking taxes out of the picture it's exactly the same as issuing 235 Millions shares in the public market and paying cash. Just like when people claim buybacks done at high valuations are a crappy way of returning money, a share is worth X dollars no matter how you look at it. BeerBaron Link to comment Share on other sites More sharing options...
siddharth18 Posted February 20, 2014 Share Posted February 20, 2014 I had never heard of it either until a relative from Asia told me about it. I was like - what is WhatsApp? I've never heard of it! Anyway it's funny people keep throwing around billions of dollars like it's monopoly money. Trading expensive paper for an even more expensive paper - and BOOM - we have a deal worth tens of billions of dollars. Link to comment Share on other sites More sharing options...
siddharth18 Posted February 20, 2014 Share Posted February 20, 2014 I have to disagree with the statement that it's a good move if FB is using shares. Taking taxes out of the picture it's exactly the same as issuing 235 Millions shares in the public market and paying cash. Just like when people claim buybacks done at high valuations are a crappy way of returning money, a share is worth X dollars no matter how you look at it. BeerBaron Zuck isn't dumb and I'm sure he'd only be issuing stock if he realized that the stock price had run past its current estimate of intrinsic value. Plus I think facebook is scared to death of its user base fleeing so it will spend however many billions it takes to protect/improve/fortify its moat (especially when wall street allows it to by valuing it at $170B). The question is what will happen when facebook stock turns from euphoric to depressive - at which point facebook better have saved tons of cash for it. Link to comment Share on other sites More sharing options...
mcliu Posted February 20, 2014 Share Posted February 20, 2014 Hm.. I wonder how much BBM is worth? :) :D ;D Link to comment Share on other sites More sharing options...
Grenville Posted February 20, 2014 Share Posted February 20, 2014 Hm.. I wonder how much BBM is worth? :) :D ;D I think there is a big difference between a growing user base and a shrinking one. Link to comment Share on other sites More sharing options...
mbharadwaj Posted February 20, 2014 Share Posted February 20, 2014 It is insanely popular in India and I am an Indian living in US. It has done more for me and family with respect to maintaining contact with friends and family in India than any other channel over the last 20 years. Many of my friends and family are not active internet users. They however have smart phones as it is more of a status symbol. whatsapp works on any smart phone and it is as simple as using SMS. They did one very smart thing - made the phone number the ID in the system. This removed the "discoverability" aspect of a person on a new network from the adoption equation. Link to comment Share on other sites More sharing options...
rpadebet Posted February 20, 2014 Share Posted February 20, 2014 Facebook is trading users valued at $170 for users valued at $40. This is a good deal as long as it's with Facebook's highly overvalued stock. I think Zuckerberg is a smart capital allocator and knows FB's primary income stream is built on a house of cards -- if he can trade a piece of this for growing, disruptive companies it's a great deal for FB. If you think about it, its not a new set of users. It is the same set of users. The overlap is definitely >95%. So they are paying $19B to reach the same users. I think this $40 per user is more like maintenance capex for facebook. As their MAU's peak and as users spend more time on other apps, they have to follow their users to sustain that advertising revenue. Last year they did this with instagram and this year with whatsapp. I think as new apps get launched and acquire a decent user base, facebook will have to buy them to maintain their user base from moving away. This does not seem like a one time acquisition strategy. Link to comment Share on other sites More sharing options...
adesigar Posted February 20, 2014 Share Posted February 20, 2014 Facebook is after the installed base. Whats app has 1B users. It is very popular in India. Everybody uses whats app there. Yup a lot of my friends and family have moved from away from using facebook to stay in touch and share pics/videos. We use whatsapp. We like the individual and group conversations we have, instead of dumping everything on one wall for everyone to see. I personally post and share very little on facebook primarily due to their policies and frequent changes to try and push people into sharing more with everyone. With Whatsapp I know exactly who sees my kids pics, not someones friends and friends of friends or some stranger just because someone hit like. Link to comment Share on other sites More sharing options...
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