“I find attacking the people and company that made you a billionaire, and went to an unprecedented extent to shield and accommodate you for years, low-class,” he wrote. “I sold my users’ privacy to a larger benefit,” Acton told Forbes. “I made a choice and a compromise. And I live with that every day.” Note that this policy may change as the SEC manages SEC.gov to ensure that the website performs https://1investing.in/ efficiently and remains available to all users. José Montoya Gamboa, owner of Malhaya in Mexico, who has been using the free business app for several years, said he plans to pay for the premium version when it becomes available because he likes the ability to use it on multiple devices. Moreover, by offering premium services, Meta could boost revenue, at least incrementally, Kelley said.
With millions users around the globe company was able to make annual revenue about $20 million. That number would probably not justify the amount of the acquisition deal. WhatsApp’s major competitor, Telegram reported 8 million new users as opposed to 2 million unique subs on the Line app in 2014.
There would have been no partnership between our two companies if we had to compromise on the core principles that will always define our company, our vision and our product. Facebook has posted on its blog, detailing the reasoning behind the acquisition, as well. The post notes that WhatsApp will continue to operate independently and retain its brand.
Google’s unusual offer to WhatsApp
While continuing with a pattern of primarily talent acquisitions, other notable product focused acquisitions include the $19 billion WhatsApp acquisition and the $2 billion Oculus VR acquisition. Facebook paid $4.59 billion in cash and 178 million shares of its stock for WhatsApp, as well 46 million of grants in restricted stock units for WhatsApp employees that will vest over a four year period. At Monday’s opening Facebook share price of $77.17, the deal translates to roughly $21.8 billion. The acquisition supports Facebookand WhatsApp’s shared mission to bring more connectivity and utility to the world by delivering core internet services efficiently and affordably. The combination will help accelerate growth and user engagement across both companies. Social networking is the use of internet-based social media platforms to make connections and share various media with friends, family, colleagues, or customers.
It has over two billion active users and is one of the few apps to be downloaded over five billion times. Facebook saw WhatsApp not just as a growing adversary but as a possible killer of the social media app. As per Porter’s 5 forces analysis, WhatsApp was becoming a threat of substitutes for the company. WhatsApp was growing steadily in its percentage of market reach beating out popular mobile apps.
- While Facebook Messenger, the company’s chat platform, is popular with users, recent attempts to create its own direct messaging service have failed.
- Full BioAlison Deutsch works at the ACLU as the direct marketing data manager.
- Unsurprisingly, this has resulted in a squeeze on profit margins.
- They already had a good arrangement with their venture capital backer.
- Here are some little-known facts about one of the largest tech acquisitions.
Mark Zuckerberg is betting large sums of money, currently at a loss, on a future in which the metaverse will be a growth driver for the company. But with his bet on the metaverse as far as a decade out before coming to fruition, the Meta CEO has stressed that in the short-term it is WhatsApp that is among the initiatives to focus on for growth. “I sold my users’ privacy to a larger benefit,” Acton told Forbes in September, detailing the conflicts that eventually led to his departure. In the piece, Acton described how Facebook had set goals for WhatsApp to hit a revenue run rate of $10 billion within five years of monetizing by pushing ads and offering businesses ways to directly communicate with users. Worldwide, WhatsApp is the most popular messaging service in over 100 countries.
Facebook to Pay $19 Billion for WhatsApp
Facebook had $7.9 billion in revenue last year, most of it from advertising. Mr. Zuckerberg said that money would help give WhatsApp the breathing room to focus on growth without needing to come up with an immediate plan for making money. In the announcement on Facebook’s website, the company said that WhatsApp’s messaging volume is now approaching the entire volume of all text messages sent globally. Based on global estimates, that number could be as high as seven trillion messages sent on WhatsApp a year. The image above is a note that Koum keeps on his desk, outlining the focus of the company on building a ‘focused messaging experience’. Sequioa’s Jim Goetz says that founder Koum’s time growing up in a communist country shaped how he developed WhatsApp.
The 55-employee company, which acts as a kind of replacement for text messaging, has seen its use more than double in the past nine months to 450 million monthly users. That makes its service more popular than Twitter Inc., the widely used microblogging service which has about 240 million users and is currently valued at about $30 billion. WhatsApp investor Sequoia has also posted some information about the acquisition, specifically its very large valuation. The company notes that it only has 32 engineers — making the ratio 1 engineer to every 14 million users. Facebook is purchasing messaging giant WhatsApp for $16 billion in cash and stock, according to a regulatory filing. The deal is being cut for $12 billion in Facebook shares, $4 billion in cash and an additional $3 billion in RSUs for employee retention.
Facebook Buying WhatsApp For $19B, Will Keep The Messaging Service Independent
Another newly released confidential chart shows that WhatsApp was sending 8.2 billion messages a day compared to Facebook Messenger’s 3.5 billion. Facebook says it has wrapped up its landmark $19 billion acquisition of WhatsApp, a deal that was hashed out in Mark Zuckerberg’s house over the course of a few days in February and sealed over a bottle of Jonnie Walkerscotch. For Zuckerberg’s company, user growth comes first andmonetizationlater. WhatsApp’s six-month revenue for the first half of 2014 totaled $15.9 million, and the company incurred a staggering net loss of $232.5 million.
Number any user in need of instant communication will definitely like. 32 – It may sound unbelievable, but only 32 people were working in the company in February. Later in October, when merger was realized, company was employing 56 people. From the moment of opening the newborn firm, both founders wanted a different kind of company.
Facebook-WhatsApp deal: 10 little-known facts
Facebook will now award 177.8 million shares of its Class A common stock and $4.59 billion in cash to WhatsApp’s shareholders, it said in an SEC filingover the weekend, plus 45.9 million shares to WhatsApp’s employees to complete the deal. WhatsApp helped fuel Facebook’s growth in developing markets where internet connectivity is sparse, and WhatsApp is widely used. Connecting to WhatsApp users in these areas will also aid the Facebook Connectivity initiative; Meta CEO Mark Zuckerberg’s plan to implement internet access to parts of the world not yet online. With a shared mission of enhancing global connectivity via internet services, the merging of forces will likely accelerate growth for both companies. With so much cash thrown around in Silicon Valley, it’s not easy for an acquisition to cause a stir. Facebook’s acquisition of WhatsApp in 2014 did just that—surpassing Google’s $3.2 billion purchase of Nest Labs and Apple’s $3 billion Beats Electronics procurement—to become one of the largest tech buys of all time.
More Messaging App Data
The app launched in 2009 and, as of 2020, had more than 2 billion users. Full BioAlison Deutsch works at the ACLU as the direct marketing data manager. She has 9+ years of experience working with NYC-based nonprofits.
He follows a value investing approach inspired by Warren Buffett and Charlie Munger, investing in high quality business only when they are deeply discounted. By definition, this requires a deeply contrarian approach, independence of thought, and a willingness to invest where others are fearful. Metaverse investment – We believe whatsapp sold to facebook price the emergence of the metaverse is inevitable. However, it is in the early stage of development and it is difficult to know if Meta’s investment will be successful. However, the company has a proven ability to adapt, retain users and successfully transition them through new features amidst pressure from competition.
Koum still had around 45% at the time of the deal, leaving the Ukrainian-born immigrant to pocket $6.8 billion and former Yahoo engineer Acton with $3.5 billion after taxes. WhatsApp founder Jan Koum now gets a seat on the Facebook board and will match Zuckerberg’s $1 salary. While it is right to be mindful of margins, we strongly believe that businesses shouldn’t cut costs purely to improve short-term quarterly earnings figures.
WhatsApp has reached its 450 million active users base faster than any other company in history. Whatsapp’s monthly user base tops even that of Facebook , Gmail , Twitter and Skype . In fact, its messaging volume is approaching the entire global telecom SMS volume. Outside of these legal issues, WhatsApp has continued to implement new features to its service in recent months.
WhatsApp surpassed five billion cumulative downloads in 2021, one of a shortlist of less than 10 apps. It was Koum who saw the potential of operating through the Apple App Store after purchasing an iPhone in early 2009. The app initially focused on statuses; Koum later revealed that part of his motivation was to stop missing calls while he was the gym. The company’s total cost base for FY22 is forecast to be $85-$87 billion with a further increase of almost 13% higher FY23 as the full impact of recent investment feeds through. Capex is also expected to increase by about almost 15% next year, with all of the incremental investment being driven by the company’s increased investment in AI. We reiterate our “Buy” rating but expect earnings and therefore the valuation to remain under pressure in the short-to-medium term.