Your browser (Internet Explorer 6) is out of date. It has known security flaws and may not display all features of this and other websites. Learn how to update your browser.
X

My ($19B) cents on WhatsApp acquisition

facebook-whatsappI recently came across a chart summarising the cost per user of famous tech acquisition, indicating that WhatsApp acquisition by Facebook could somewhat be justified based on the relatively low cost per user paid ($35.56) compared to other tech acquisitions. While I can’t really comment on if $35 is a fair price to acquire users, I don’t believe it is the correct amount.

First of all, according to SEC filings, out of the $19B Facebook paid :

  • $12B are in Facebook stock, based on today’s price, which is more or less monopoly money since I doubt anyone from WhatsApp will liquidate, especially with the founders  joining Facebook board ;
  • $3B are in restricted Facebook stock to retain WhatsApp employees (aka signing bonus, no one will cash out before years) ;
  • Only $4B is in cash.

So, if we assume that only the $4B are used to acquire the 450M WhatsApp users (the rest being acqui-hire in monopoly money), we’re talking here about a cost of $8,8 per user. An if you take into the equation the fact that Tencent, Facebook biggest competitors, could had have eyes on WhatsApp (it’s just an intuition but would have been a smart move to conquest US and Europe markets), I think the cost per user is even lower than $8 (since part of the price is motivated by defending Facebook presence in his markets).

Not bad for a community of users with very high usage, right?