Facebook, the social media giant, has finally decided to talk about its latest and largest acquisition. According to the sources, the company is going to buy WhatsApp for $19 billion. While Facebook fans think this is going to be a complete new beginning for the online networking company, some analysts oppose the idea of such a big investment in a fairly new organization. In all, now it’s time to see whether this new acquisition of Facebook paves the way to new possibilities.
The bulky acquisition amount will include some amount of cash and some stocks. To be very exact, both the parties have agreed to a deal amount which involves cash of $4 billion and stock of $15 billion. Some big minds from large financial institutions think that Facebook has overvalued this new organization and thus the acquisition amount is insanely high for this deal. The way Facebook looks at this new collaboration is quite different though.
The WhatsApp Success
WhatsApp was founded by a Ukrainian immigrant, Janne Koum. His dream was to build a platform which could help customers get access to an unlimited messaging service without having to pay a large bill. His dream became true with the launch of WhatsApp and its unbelievable success. The company could register 450 million users within just five years of time span. What’s more overwhelming is that almost 1 million users get registered for its service every day additionally. That’s called success beyond imagination.
WhatsApp helps customers connect through its free text messaging service. The company has brought a new networking opportunity to the people where they don’t need to pay anything for its messaging service for a total one year. The company starts to charge $1 as an annual fee after providing one year of free service though. What WhatsApp has been able to achieve within such a short amount of time is just incomparable. Its number of active users soaring high every year. However, investors who are trying to analyse the outcome of this collaboration also need to remember that WhatsApp’s revenue doesn’t come from any conventional monetizing avenues. It doesn’t have any platform that can generate income through advertisements. So, its only source of income is its $1 annual subscription fee that the company takes from its customers after offering one year of free text messaging service.
Will It Be a Mutually Beneficial Collaboration?
As WhatsApp has been able to build a huge customer base over the years, Facebook thinks it will help the company connect with millions of new Smartphone users in the long run. As for now, Facebook is considered the biggest social networking giant. Investors from all around the world are waiting to see if the new collaboration of the two achievers can become mutually beneficial for both the parties. Facebook founder was found to comment on its new acquisition recently. According to him, Facebook is not planning to place any advertisements on WhatsApp’s user interface. So, now analysts and investors are waiting to see whether Facebook can really turn this deal into some remarkable business idea. As both the innovative companies are going to be on board together very soon, all eyes will be on their next move and expectations will be skyhigh.