Facebook adds 450 million new friends for $19B with WhatsApp

Facebook agreed to acquire WhatsApp in a cash-and-stock deal valued at $19 billion total.

Deal Points

Facebook will pay $12 billion in shares, $4 billion cash and an additional $3 billion in restricted stock units to be granted to WhatsApp’s founders and employees. WhatApp has more than 450 million monthly active users(from Sequoia Capital) and this values it at just over $42 a user.

450 monthly active users and 320 million daily active users

Facebook is buying a rapidly growing userbase that has grown from 100 million daily active users in 2012, to over 3 times that in 320 million daily active users, today.

High Engagement level

On a conference call with analysts today, Mark Zuckerberg stated:

“WhatsApp is the only widely used app we’ve ever seen that has more engagement and a higher percentage of people using it daily than Facebook itself”

Service plans to keep its mantra

“No ads. No games. No gimmicks.” Is the mantra of founder Jan Koum, whom even keeps it on a note taped to his desk. Koum and Zuckerberg both confirmed that nothing about that will change. “I don’t think ads are the right way to monetize,” Zuckerberg said on the call.

WhatsApp’s current monetization strategy at the moment is to offer its app for free to users for the first year and then charge a $0.99 subscription fee for each additional year that users remain on the service

Sequoia Capital Big Winner

Venture capitalist firm Sequoia Capital invested $8 million 2011 in WhatsApp according to the Wall Street Journal. In a blog post today, a Sequoia Capital partner praised the deal and outlined some of their key numbers behind the deal including the 450 million active users Facebook is buying.

Form 8-K

The Form 8-K for this transaction with the official deal points from the SEC is available here.

InvestCorrectly Staff
InvestCorrectly Staff

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