Facebook investors ignore the criticisms to the purchase of WhatsApp
Shares of Facebook, that during the day came to fall 3.4%, closed Thursday up 2.3% to settle at U.S. $ 69.63 on Nasdaq. Investors felt that the potential benefits of the transaction exceeded $ 19,000 million that the network paid for the courier company WhatsApp.
The reasons are obvious. The amount of monthly users of WhatsApp, which has 55 employees and serves as a kind of replacement text messaging, has more than doubled in the past nine months to reach 450 million. The application is more popular than Twitter Inc., the microblogging site that has 240 million users and whose valuation amounted to $ 30,000 million.
“The acquisition of WhatsApp gives Facebook a solid position in mobile messaging, which we believe is a crucial part of the core mission of the company’s connects the world”, said Doug Anmuth, analyst for J.P. Morgan. “We believe that WhatsApp is one of the few networks that are heading to the billion users in the next few years, which makes it an extremely attractive active future”, he added
The transaction, which includes $ 12,000 million in stock, $ 4,000 million in cash and $ 3,000 million in restricted stock to be received by founders and employees WhatsApp in a span of four years, gives WhatsApp a higher valuation than 275 members Standard & Poor’s 500, which represents the largest U.S. publicly traded companies index.
The pact, which prevents WhatsApp fall into the hands of rivals Google Inc. and Facebook, could bolster the popularity of social networking among younger users as well as internationalization and its mobile business. “Although the price seems high acquisitions costs and justify the valuation in the case of a company with negligible income scale platforms and growth of WhatsApp have significant strategic value. Briefly, with the purchase of Instagram and WhatsApp, Facebook has nullified the risk that Google becomes a major player in the social media networks and through acquisitions”, said Jordan Rohan, an analyst at Stifel Nicolaus.
Even by the high standards of Silicon Valley, the story of WhatsApp is extraordinary. The company was founded in 2009 by the Ukrainian immigrant Jan Koum and American Brian Acton, and reached 450 million users faster than any other company in history, according to Jim Goetz, partner and investor fund venture capital Sequoia Capital. Facebook, however, was only 150 million users after its fourth year, a third of WhatsApp.
It is still unclear how high revenues WhatsApp and the company refused to address the issue. Cobra $ 0.99 per year after one year of free use and has no advertising. During a conference call with analysts, CEO of Facebook, Mark Zuckerberg, said he does not believe that advertising is the best way to monetize messaging systems. Instead of using income as a tool to evaluate how much you are paying Facebook for WhatsApp, the tas analysts suggested it was better to look at how much I was paying for the service user.
Facebook is paying around U.S. $ 36 per user of WhatsApp, ie much more than the $ 9 which ja-ponesa ecommerce disbursed Rakuten few weeks ago by the courier Viber Media Inc., analysts the company. The figure, however, is considerably less than the $ 130 that the market assigns to each user of Facebook, LinkedIn and Twitter.
Beyond price, analysts applauded the purchase by Facebook of a company with great international popularity. “We believe the acquisition by Facebook WhatsApp is tenable for three reasons: 1) Strategy: WhatsApp is unquestionably an asset that strengthens the strategic position of Facebook in the mobile communications business and social networks, 2) growth: WhatsApp has been growing incredibly fast, with the addition of one million new users per day, and 3) Valuation: valuation WhatsApp, if you look at it with the same prism that other networks that have achieved scale measured (as Twitter) is not entirely far-fetched considering its price per user, “said Anthony DiClemente, Nomura.
Analysts also pointed to the accelerated growth rates and the possibility of WhatsApp to reach 1000 million users, something that could happen in the coming years, predicted Zuckerberg. “While monetization will take time, we believe that the potential user base … size should ultimately, lead to a significant monetization”, said an analyst at Sterne Agee Arvind Bhatia, adding that 70% of users come to the platform WhatsApp daily, which exceeds 62% of users Facebook itself.
WhatsApp was long considered as an acquisition target for the Internet giants. Two near-nas sources reported that Google tried to buy the company a few years ago. Two other sources said that the two companies had held recent talks. A Google spokesman declined to comment.
Other analysts showed higher qualms about the price paid by Facebook. “While we recognize that the Facebook management team has demonstrated excellent criterion for procurement and vision, we believe that the price of WhatsApp can go a little beyond what we would see as a typical premium for acquiring a very active demand. This price may have gone by the interest of other major competitors first Apple and potentially Google”, said Gene Munster, an analyst at Piper Jaffray. “It is unlikely that WhatsApp will provide significant revenue before the end of 2015, at least”.