Facebook to buy WhatsApp for $19 billion!

February 19, 2014

    whatsapp-app-1

    We’ve updated the post to reflect that the total cost of the acquisition is $19 billion, when taking into account restricted stock units granted to WhatsApp employees.

    Facebook will acquire messaging company WhatsApp for $19 billion, Mark Zuckerberg’s company revealed today in a regulatory filing.

    As part of the deal, WhatsApp’s shareholders will receive $4 billion in cash and $12 billion in Facebook stock, while employees and founders of the popular messaging service will receive $3 billion in restricted stock units that will vest over four years. According to Facebook, Whatsapp will continue to operate independently and keep its brand. WhatsApp co-founder and CEO Jan Koum will become a member of Facebook’s board of directors.

    In the official announcement, Facebook says that over 450 million people use WhatsApp at least once a month, and of these people, 70 percent use it every day. The number of messages exchanged on the platform is approaching the entire global SMS volume, which is telling for the magnitude of WhatsApp’s reach and influence. And the service doesn’t show any signs of slowing down, with one million users currently joining every day.

    “WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable,” said Mark Zuckerberg on the deal. Facebook itself can boast the same number of users.

    Facebook wants WhatsApp to “set its own direction and focus on growth while also benefiting from Facebook’s expertise, resources and scale”, meaning that the brand will continue to exist more or less unchanged. Facebook Messenger and WhatsApp will co-exist.

    WhatsAppGrowth

    The deal comes just days after another messaging service was acquired – Viber was bought by Rakuten for a comparatively modest $900 million.

    If the deal falls through due to a failure to obtain regulatory approval, Facebook will pay WhatsApp a fee of $2 billion in cash and stock. Stay tuned for more.

    Read: What is WhatsApp, and how popular is it ? and Google reportedly offered to buy WhatsApp for $10 billion

    Comments

    • Shark Bait

      I would love to know where they get that number from

    • Bogdan

      They should better focus on improving their facebook app instead

    • John Doe

      FB is buying WA?.. aaahhhhh … I so hate FB!!
      Hey FB! keeps your f’n hands off an actually useful application
      Fuk .. FB … !

      • deepen915

        they said it will continue by itself.. just look at Instagram as a great example before ranting.

    • MasterMuffin

      Waaaaaay overpaid. I don’t know how one could justify that amount of money being used to buy something that doesn’t make that much profit

      • Mike Reid

        Like another dot-com boom, Google’s doing it too. Allegedly to get the “talent” in these companies.

        • MasterMuffin

          But paying a total of $19 billion is just stupid in my opinion!

          • deepen915

            stupid for you.. but Zuckerberg would be laughing right now looking at your post. he’s a GENIUS.

            • MasterMuffin

              sure sure

            • On a Clear Day

              A Genius? What genius does it take to do what he has done? It’s not Zuckerberg’s money – its OTHER PEOPLES’ MONEY – he’s playing with. Easy – to be free and easy – spending ridiculously, when you didn’t have to actually do anything remotely qualifying as real work to acquire it.

        • Guest123

          If goog and fb need to pay this type of cash for this “talent” then that doesn’t speak well for their current crop of employees.

          Maybe they ought to look at their hiring practices and stop paying ridiculous prices.

          • deepen915

            who touched your bank account? RELAX

            • Guest123

              yeah, you are right. . . non of this comes back to effect the customers/users in any way.

              No, we don’t pay for anything, companies make money from thin air.

      • MadCowOnAStick

        They probably could have fed the hungry for 2 days ;-;

      • deepen915

        this is their big step into the mobile app world.. this is BRILLIANT.

    • Mike Bastable

      Desperate times for Facebook.
      Oops i seem to have written that 2 years early.
      Sorry.

    • Throne

      I’m happy because I never use WhatsApp or Facebook.. :)

      • Guest123

        that made me laugh. . . and I never use either of them as well. . .

        BUT $16 BILLION?!?!?! F’ NO!

        • kandy830

          My Uncle Caleb just got red Ford Focus ST by working off of
          a computer. try this F­i­s­c­a­l­P­o­s­t­.­ℂ­o­m

      • deepen915

        and nobody cares! the billions of us who do use both apps will keep using both!

    • Peter Frazier

      sounds like a google play.. you keep being YOU and we’ll just.. what? protect? fund?

    • Stefan

      Ok, let’s do some math here:
      WhatsApp has 450 milion active users, so it can generate a maximum of 450 milion dollars an year, give the subscription of 1$/year . A good estimate is that it can make 250 milion dollars an year, asuming 60% of users will accept paying for the service. By using it’s advertising magic, Facebook could double the number of active users in the next year so that gives us half a billion/year from user subscription only. Since WhatsApp makes money from deals with carriers too, the revenue could be much higher.
      This aquisition seem to be la really long term plan for facebook, but it’s worth to remember that the same company bought Instagram for 1 billion back when it had only 30 milion users (and that number increased to 150 by now).

      • wintelightbox

        android users doesn’t pay subscription fee right?

        • Stefan

          First year is free, then it’s 0.99$/year, and since 70% of users are active , i assumed 60% will pay

          • gdfgdf

            Yeah well, all those numbers are wrong you know why? because the majority of kids and 20something’s (the main users) switch apps when they have to pay their sub fee. There is plenty of alternatives now. The fact that they effectively “opened an account” doesn’t make them actively using it But WhatsApp have to sell themselves and present over enthusiastic numbers

            • Stefan

              You have a good point, although the fact people use WhatsApp (a lot) and would have to convince all their friends to use another app when they switch should make them pay. That being said, i use at least three services for messaging, though WA is probably the better one on mobile.

          • Pran

            I have been using whatsapp for more than 3 yrs, never paid for it… They always renew it for free. Every smartphone user here has whatsapp. All of my friends are on whatsapp and none of them have ever paid for it. So I dont think they are making that much from subscription.

      • Nicolo’ Brentan

        As pran says, the fact that you actually have to pay for WhatsApp is basically a myth.

        After hitting “Pay Later” several times and being blocked for a couple of days WhatsApp has always (more than 5 times) renewed my subscription for free.

        This is because I’m of more value to them then WhatsApp is to me (which is not even $1, in fact not even $0.01 on principle), and every additional user is so valuable because of the network effect in this field.

        By claiming so many active users (which really are active, just not paying), WhatsApp has been shopping around for buyers for a while, with investors knowing that they absolutely needed an exit or within a couple of years any one of the industry giants could have swept the market from under its feet.

        “Mobile” is arguably the most important space right now because as we approach full convergence of these devices EVERYTHING will actually become so.

        Facebook knows this and have been making major pushes in the segment, but all quite unsuccessfull (the Facebook/HTC phone, Home, Messenger on the phone…)

        IMHO they felt that they had to do something fast, feeling threatened by Hangouts (now the standard messagging app from KitKat onwards, which could potentially be a positive drive even for G+) and the smaller players, like Rakuten that just bought Viber or BBM.

        So they made a highly strategic move to get the player with the largest userbase, but (again IMHO) they overpaid substantially considering WhatsApp has no sustainable competitive advantage.
        Its biggest asset is US, the USERS, which USE it solely because our friends are on it as well.
        But the barriers and costs to switching services are inexistant, since there are several free and more feature-rich alternatives, and the transition is easy given you can have as many of these apps installed at once.

        It is important to note that 12 billion is in FB stock and 3 billion in bonuses, so a lot of the value is actually determined also by whether Facebook can actually dominate for the coming decades, and this strategic acquisition could have its small part in that.

        But even then just the 4 billion in cash seems too much for an intangible asset (users surely aren’t human capital) with little to no brand loyalty.

    • KillEmAllx

      That’s just too much money. WhatsApp is awesome, I use it everyday and it is my most used messaging app, but I don’t think it’s worth that much (Motorola was cheaper if I’m not wrong). And the only thing Facebook will do is f**k this app up, just look at their own mobile apps, they’re a mess.
      And how can companies have so much money to spend, I don’t even…

    • Luka Mlinar

      UP side is it’s gonna be free. Down side is we can expect some FB integration. If that happens, me and my friends will be moving on. Android messengers are a dime a dozen.

    • Siphiwe

      All I’m thinking is ads, now we’re screwed! I don’t really believe what Zuckerberg was quoted saying.

    • Jayfeather787

      Not using whatsapp anymore.

    • smokebomb

      I’d like to hear news about Google adding MMS to Google Voice. Pretty sure it’s been 3 or 4 years and they still haven’t added it.

    • Sidd

      4 billion + 12 billion +3 billion = 16 billion??
      No wonder I scored so badly in Maths!!!

      • deepen915

        there is a 3B stock bonus to shareholders.. bad writing by AA.

        • Sidd

          Exactly- 3B stock (Bonus or whatever) but it has a value and to the best of my knowledge no accounting standards will minus that from acquisition value.
          I am not surprised by writing of AA. Lets face it, we are all human and we tend to make mistakes but after so many comments if no one points that and if someone has pointed that out and still no correction or explanation has been made, I have no words for that.

    • Groud Frank

      Sounds like one hell of a deal for Whatsapp. I can’t say the same for Facebook with a straight face.

    • http://www.coolicool.com/ coolicool

      Wow, why does facebook want to buy whatsapp? he has facebook messenger already.

    • T.J.

      What is whatsapp?

    • https://cheapsslsecurity.com/ Laura Smith

      Hope “whats app” features remains as it is…

    • Tom Z

      Never heard of What app until this news story broke. Still not sure what it’s for, guess I will have to check the Play Store.

    • phuongot

      And the service doesn’t show any signs of slowing down, with one million users currently joining every day.
      http://bepdientuduc.vn/may-rua-bat/nardi

    • Shelta

      Now I’d like to leave WhatsApp, but the main problem is that all of my friends use it! Now FB gets all of our data, especially that fast private messages we share only on WhatsApp!

      • On a Clear Day

        Your data, your friend’s date (and contact info) is what Facebook, WhatsApp, Viber and all the others that scarf up and suck up – once you sign up – your contacts and mirror them on their servers.

        You think they do all this because their hearts are filled with sweetness and light; that the milk of human kindness only flows through their veins? If so, I have this wonderful waterfront property (on all sides) that is resplendent with flora and fauna of both the flowering and devouring kinds in Florida that I just KNOW you are going to want to buy! lol

        WhatsApp has had more than enough security breaches to make its use be cause to question the quality of one’s thinking processes.

    • Anita Francis

      RIP privacy.. You are missed every single day! Anybody who says I’m over-reacting can shove their comments up their whatever.. Pleasant morning, and then I hear this..

      • asd

        I agree and the fact that they paid that much money for a product that doesn’t have amazing profit makes me worry…especially with the facebook and the NSA revelations. But who knows we could be over reacting

    • Anita Francis

      I heard there’s a new Terminator movie coming. This time around they don’t need to rely on their imagination. They can simply pick one from facebook, google or even whatsapp now, to play skynet. Woohooh!!

    • Mark Rich

      Used it once or twice but can now close my account with a reason.
      It’s a shame it’s been sold, on the other hand had it gone to Google, they would have shut down the company and closed the product as they have for almost all of the companies they’ve bought so at least it will live on in one form or another.

    • Vincent Goh

      I liked WhatsApp because it’s not related to Facebook. As simple as that.

    • GadgetDeputy

      Your #1 Source for anything related to Technology

      http://gadgetdeputy.com/

    • John Garlits

      Glad I stopped using WhatsApp already. :P

    • Rohit Naik

      First Lets Bring everyone on Whatsapp

      Please be free to share the video among your friends

      http://www.youtube.com/watch?v=VHcZ47z_el4

    • Andrew White

      Time to unsubscribe from WhatsApp

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