Is Whatsapp worth $19 billion ?


On 19th February, Facebook Inc. acquired WhatsApp, cross platform instant messaging (subscription based) service. Whatsapp has more than 400 million users right now and its still growing. Whatsapp has an average 10 billion messages exchanging everyday and has record of 27 billion messages exchanged in a single day. WhatsApp as user count and activity is bigger than Twitter.

That all statistics are great but what keeps bugging my mind is, “Whatsapp really worth $19 billion ?”

The reason why I keep thinking is, Whatsapp gives the first year free for all users then it charges $0.99/year. And also faces a competition from WeChat(270 million active users), Kakaotalk(20 million users), Line(300 million active users), Viber (90 million users), Kik(50 million unique users)and many others which are aggressively competing with Whatsapp. Surely though Whatsapp has a better appeal and much more features than other chatting applications.

As I see, Whatsapp will most likely charge $0.99 to all their 400 million users which means Whatsapp could rake in less than 400 million dollars a year. Which means it could take 40 years for Facebook to cover the money that they are going to give away in cash($16 billion) to Whatsapp. If we think about the growth then its possible sooner, but still $1 billion is wayyy off charts.

But Facebook has always acquired companies for technology and talent not for revenue. Which if it was their aim ponder, $19 billion is insane amount of money they gave away. Facebook could have done so many things with $19 billion, here is a list >>

Whatsapp was also offered $10 billion by Google. Which makes me think, were Google and Facebook competing to buy this product ? And Facebook in lieu to win, offered insane amount of money to win against Google ?

By the way, I think $10 billion was also too much money. Skype was acquired by Microsoft for $8 billion and which actually I think is more profitable than Whatsapp and has also talent or technology that Facebook is hunting for.

Or maybe Facebook wanted Google out of the instant messaging services or any other social media products. Facebook is applying the same strategy which Google applied towards Microsoft when Microsoft was desperate to own a piece of Internet.

Maybe my analogies are wrong and there might be also another perspective which I think I might have missed out. If you can view this acquisition in a different perspective do comment and let me know.

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