Facebook has announced that it will buy WhatsApp for $19 billion.
For those that whimpered at the price Zuckerberg and friends paid for Instagram, the tag for WhatsApp will surely make them piss in their pants. According to Facebook’s blog, the social networking giant will fork over $4 billion in cash, $12 billion in Facebook shares and $3 billion in restricted stock units. The grand total, if you didn’t already do the math, is a whopping $19 billion! That’s 19X what Facebook paid for Instagram.
“WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable,” said Mark Zuckerberg, CEO and founder of Facebook. “I’ve known Jan [Koum] (WhatsApp co-founder and CEO) for a long time and I’m excited to partner with his team to make the world more open and connected.”
WhatsApp’s meteoric rise is indeed a special one, and anyone who didn’t know about the platform will definitely know about it now. According to data from comScore, WhatsApp managed to garner over 400 million active users per month within four years, while Facebook achieved just 145 million users within that same time frame. What Facebook managed to get done in four years is nothing to laugh at, and there’s also the argument that WhatsApp and Facebook came to be at different stages in the evolution of social networking.
Social media analysts and investors have, in recent months, criticized Facebook for failing to obtain and retain new users. When news broke that Facebook was losing users in the teen segment, many were quick to call for the demise of Zuckerberg’s empire. Although Facebook is having a hard time scoring new teen users and an overseas audience, the company claims that they see growth from older generations (20+) and seniors.
Regardless, it appears Facebook management is taking note of what needs to be done to keep the world from moving to other social networking platforms. One could call it fear of competition, but it’s not fear if you can simply buyout the competitor. Whatever the case, WhatsApp and its team of 50 employees, 32 of which are engineers, are now extremely wealthy.