WhatsApp Worth Much More than $19B, Says $FB. But When?

Facebook CEO Mark Zuckerberg thinks WhatsApp is worth more than the $19 Billion Facebook paid as a standalone company, let alone as part of the world’s largest social network.

But Zuckerberg also hinted that Facebook wouldn’t see that value in the near future.

Zuckerberg made the comments at the Mobile World Congress, an exhibition and trade show for mobile communications held in Barcelona. Though most of his interview focused on Internet.org, Facebook’s initiative to connect the developing world to the Web, he made it clear that the goal for WhatsApp in the next five years would be to grow its user base, not to make money.

“The next five years will be about connecting people,” he said, according to live blogs of the event.

$FB Zuck is talking up FB on Bloomberg. He does recognize shortterm there will be losses on W/A purchase, but it's a good buy.

— Duke Duke (@duke2duke) Feb. 24 at 12:35 PM

Since Facebook announced it would purchase the messenger service for $12 Billion in stock, $4 Billion in cash and $3 Billion in deferred stock, Facebook shares have climbed. They rose nearly 3.5% by 3 p.m.

Maybe it means little, but $FB market cap is up $8bn since it announced WhatsApp acquisition.

— Ivaylo Ivanhoff (@ivanhoff) Feb. 24 at 02:16 PM

$FB from it's after hours low after announcement to now has added value of WhatsApp purchase. People don't get mkt caps….

— LMF (@mytfine) Feb. 24 at 02:01 PM

Some cashtaggers have one word for the $19 Billion valuation of WhatsApp and the subsequent rise in Facebook shares: Crazy. The purchase price, they say, would imply that each of WhatsApp’s 450 million users is worth more than $42. That simple math doesn’t include the value Facebook is putting on expected new users, which WhatsApp is adding at the rate of a million per day. But it still implies a high worth to each user.

$FB Just bought $65 Puts. To me, these insane valuations sure feel a lot like the late 1990s.

— Brendon (@rattlehead) Feb. 24 at 02:29 PM

How Facebook plans to ultimately squeeze that value—and more—from WhatsApp’s subscribers is unclear. WhatsApp does not subject its subscribers to advertising and charges $0.99 annual fee, after the first year. WhatsApp’s founders, according to WhatsApp’s only investor Sequoia Capital, are anti-ads.

Facebook has pledged not to change WhatsApp in the near term. In his Facebook post announcing the deal, Zuckerberg said WhatsApp will continue to operate independently within Facebook and its product roadmap will remain unchanged.

Some cashtaggers and analysts doubt that WhatsApp won’t ultimately get advertising. But others believe that Facebook won’t change WhatsApp’s no-ads vision.

In a Feb. 24 note to clients, SunTrust analyst Robert Peck said Facebook will likely try to monetize the service through mobile payments. That industry is projected to grow to $90 Billion in the U.S. alone by 2017, according to Forrester Research. Facebook plans to grow the U.S. user base. Much of WhatsApp’s users are abroad.

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