Feb. 20 - Facebook is justified in paying $19 billion for WhatsApp, say many analysts, because it adds 450 million active monthly users and bolsters Facebook's mobile business. Fred Katayama reports.
Social media sticker shock: The whopping $19 billion Facebook is paying to buy the messaging app WhatsApp is bigger than the $16 billion Facebook raised in its IPO, bigger still than Sony's $18 billion valuation, and bigger than the GDP of the Bahamas and Albania put together. And Facebook is paying 14 times more per user than what Raukten paid to buy Viber last week. Facebook's stock gave back some of its 25 percent gain this year at the start of trade. But many Wall Street analysts think WhatsApp is worth it. They point out that it's still far cheaper than the valuation of Facebook's own users. And What'sApp will bring over 450 million users, who are more active than Facebook's customers. It could strengthen Facebook's mobile and overseas businesses. J.P. Morgan analyst Doug Anmuth says, "...we do believe WhatsApp is one of the few networks on the path to reaching one billion users over the next few years, making it an extremely attractive asset over time." And making its co-founder, Jan Koum, into a billionaire worth nearly $7 billion, according to Forbes. He's a Ukranian immigrant whose company collects a fee but doesn't sell ads or collect personal data. And he's low key. He lists himself in LinkedIn simply as a quality tester and senior tweet manager. He's got a lot to tweet about.