The world largest social network Facebook (FB), agreed to purchase WhatsApp inc. The price: $19 billion. Facebook will pay with cash and stocks. Yesterday, Facebook said in a statement that they will buy WhatsApp for $4 billion in cash, $12 billion in stocks and $3 billion is restricted shares.
CEO Mark Zuckerberg bought Instagram in 2012 for $700 million. Not so much money compared to WhatsApp, but this is Facebook`s biggest acquisition so far. According to Bloomberg this is the largest internet deal since Time Warner`s $124 billion merger with AOL in 2001.
With WhatsApp you can send text messages for free. WhatsApp is free for the first year, and then it costs 99 cents a year. Other competitors are WeChat (China), Kakao Talk (Korea) and Line (Japan) to name a few of them.
But who have not sent text messages for free? What about Skype, MSN, ChatON and Facebook messenger? You can also chat on Google. Do you remember ICQ? How difficult is it to start a new one? Take a look at all the text messages around the world. It`s massive!
Facebook`s market cap is now $170 billion, trading at $68,06. Up +1,13% yesterday, but down -3,47% AH. With this valuation you know that investors value Facebook for the future, and not today. This looks like the tech bubble in late 90`s, so be careful and think about the peak potential for Facebook in the future.
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