Why facebook paid $19 billion for WhatsApp
WhatsApp’s jaw-dropping $19 billion price tag took the world by surprise. But Facebook might have actually gotten WhatsApp for cheap.
What is WhatsApp?
WhatsApp is a mobile messaging service that functions as a kind of a social network. WhatsApp users can send messages to one or many recipients at the same time, and they can even share their locations.
In many ways, WhatsApp’s users are just the kind of customers Facebook is looking for. They are extremely active, sending more than 600 million photos a day — more photos than Facebook users upload. A whopping 70% of WhatsApp users are active every day. By way of comparison, 62% of Facebook users are active daily.
In a play to become the dominant messaging platform, Facebook acquired WhatsApp on Wednesday for $19 billion.
Facebook said it will pay WhatsApp $4 in cash and $12 billion in stock.
WhatsApp’s founders and employees will be eligible for another $3 billion in stock grants to be paid out if they remain employed by Facebook for four years.
WhatsApp CEO Jan Koum will also join Facebook’s board of directors.
WhatsApp has upwards of 450 million users. It is adding an additional million users every day, making it one of the largest messaging services on the planet.
Facebook, meanwhile, has been making moves to promote its own messaging services in recent years, even releasing a standalone app for mobile devices. It’s acquisition of WhatsApp will only strengthen its position in the messaging ecosystem.