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posted by
LaminatorX
on Saturday February 22 2014, @12:00AM
from the It's-like-a-telegram-but-on-a-phone dept.
from the It's-like-a-telegram-but-on-a-phone dept.
siliconwafer writes:
"Facebook's purchase of WhatsApp has generated a lot of noise in the financial and tech industries, with some calling the purchase price 'down-right silly' and 'jaw-dropping', and others have said the price is fair, but question the strategy. Is the purchase price evidence that we're entering entering another tech bubble reminiscent of the 1990s? Some say no, while others believe that a bubble may exist only in social media, given that the Global X Social Media Index ETF has outperformed the NASDAQ over the past year."
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Have we entered another tech bubble?
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-- Fry
(Score: 3, Informative) by visaris on Saturday February 22 2014, @12:13AM
Wikipedia [wikipedia.org] mentions around 200 million users as of a year ago, so FB paid around $80 a user... perhaps a little less. Sounds high to me.
(Score: 5, Interesting) by TheloniousToady on Saturday February 22 2014, @01:31AM
Agreed. Especially when you look at the business model and financials of WhatsApp.
This is just the sort of thing that happens when a single person has a majority of voting shares in a large corporation. I'm not surprised that Zuckerberg would buy such an expensive new toy, but I *have* been surprised that Wall Street would be so accepting of it. FB stock is actually slightly up for the week.
(Score: 4, Interesting) by drac on Saturday February 22 2014, @02:32AM
The number most quoted re: Whatsapp's userbase seems to be 400-450MM, which is about double that. YMMV. Honestly, I think WhatsApp was not a bad buy under the circumstances. FB paid about as much per user as Microsoft allegedly did for Hotmail back in 1998.
Facebook is sitting on a pile of cash (albeit mostly from the current price of their stock). Note that this wasn't just a cash deal - FB leveraged the price of their stock into the deal and set a 4 year vesting cliff for WA employees too.
Second, Rakuten bought out Viber [bloomberg.com] a week or so earlier for much much less, given Viber allegedly had about a quarter of the user base (I have both installed, use WhatsApp a lot more often - no particular reason, my network has people who prefer one or the other). Did Facebook overpay? Probably. I don't think people dispute that their Instagram foray was a good buy (in hindsight) although the 1B price tag raised eyebrows at the time and was called a bubble purchase.
Google and Apple buy smaller startups all the time. Fewer people notice those acquisitions because unlike FB, they don't wait until the startup becomes a large, market leading presence. I wonder if Facebook is doing this for the (additional) benefit of keeping their name in the news all the time - the free publicity certainly doesn't hurt their other properties.
(Score: 1) by mrcoolbp on Saturday February 22 2014, @02:40AM
Publicity does n't sound free....
(Score:1^½, Radical)
(Score: 3, Insightful) by drac on Saturday February 22 2014, @03:16AM
I phrased it poorly - if publicity was all they needed, they could have bought that of course. Assuming their strategy is to acquire the userbase and their contacts, all the discussion that has resulted keeps the brand uppermost in everyone's mind.
(Score: 5, Insightful) by Maow on Saturday February 22 2014, @02:46AM
I'm not sure I'd call it "free publicity". They could buy all the superbowl ad slots, all the prime time ad slots, and maybe a stack of AOL^W FaceBook CDs to every house in the western world as well for the $19,000,000,000.00.
What did Google pay for Boston Dynamics, as an example? I know that BD + FB are not overlapping in any way, shape, or form, however it seems that the Boston Dynamics example provided a lot more value for the buck.
I welcome anyone's links showing my points right or wrong...