Wall Street sees sense in Facebook's $19 billion WhatsApp buy


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Now, it has a significant opportunity to be the leading global communications utility," RBC Capital ...

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Wall Street sees sense in Facebook's $19 billion WhatsApp buy

  1. 1. Wall Street sees sense in Facebook's $19 billion WhatsApp buy Now, it has a significant opportunity to be the leading global communications utility," RBC Capital Markets said in a note. Analysts have commended Facebook's ability to make money from its mobile app. YouTube) justifying valuation over time," SunTrust Robinson Humphrey's Robert Peck said in a note. Facebook is paying $42 per user, compared with a market value per user of $170 for Facebook and $212 for Twitter, Deutsche Bank's Ross Sandler said. (Reporting by Soham Chatterjee and Saqib Iqbal Ahmed in Bangalore; Editing by Saumyadeb Chakrabarty and Lisa Shumaker) Print The company's $1 billion deal to buy photo-sharing application Instagram in 2012 and its recent $3 billion failed overture to buy SnapChat - used by teenagers to send texts and photos that disappear after a few seconds - followed unsuccessful attempts to develop rival apps. Of the 44 analysts who cover Facebook, 37 have a "buy" or a "strong buy" rating on the stock, according to Thomson Reuters data. Now they will want to see how it will earn money from the chat app's huge number of users. Reprints Analysts said the price tag for WhatsApp, founded in 2009 by former Yahoo Inc employees Jan Koum and Brian Acton, seemed reasonable from the point of view of value per user. But analysts noted that WhatsApp has over 450 million users and boasts a higher level of
  2. 2. engagement than Facebook. By Soham Chatterjee and Saqib Iqbal Ahmed HAVE SCALE, WILL MAKE MONEY Digg this Facebook has been buying apps with large numbers of young users as part of Chief Executive Officer Mark Zuckerberg's strategy of helping users share any kind of content with anyone. Link this WhatsApp's user base is less than half that of Facebook's 1.2 billion but the chat program's users are more active. The purchase price is slightly more than the market value of Sony Corp.
  3. 3. Asian rivals such as Tencent Holdings Ltd's WeChat, Naver Corp's Line and Rakuten Inc's Viber are well ahead of Facebook messenger across much of Asia. "Looking past the sticker shock of $19 billion ... WhatsApp's users are expected to reach 1 billion by 2015, according to many analysts. (Reuters) - Facebook Inc's purchase of fast-growing messaging startup WhatsApp for an eye-popping $19 billion largely won approval from analysts, who said the deal made strategic sense as it will solidify the social network's position as a leader in mobile. Share this Email Pivotal Research's Brian Wieser, who downgraded his rating on Facebook shares to "hold" from "buy," said he expects Facebook shares to face pressure in the near-term as investors come to terms with the risk of future acquisitions. Thu Feb 20, 2014 4:39pm EST Facebook has fallen behind in mobile phone messaging apps in emerging markets, where many are accessing the Internet on fast-growing 3G mobile networks for the first time on smartphones. At least two brokerages downgraded their recommendations on Facebook to "hold" but the overwhelming majority of analysts remain positive on the stock. Still, some analysts said Facebook was paying a high price to keep WhatsApp from being snapped up by a rival such as Google Inc. "Large-scale networks like WhatsApp are rare and provide (a) significant monetization opportunity (i.e. Analysts estimate WhatsApp users share 19 billion messages, 600 million photos, 200 million voice
  4. 4. messages, and 100 million video messages per day. "Facebook shares would have been pressured by more than single-digit percentages in after-market trading if Google had purchased WhatsApp instead," Stifel analyst Jordan Rohan said in a note. Credit: Reuters/Dado Ruvic A Whatsapp icon is seen on a Samsung Galaxy S4 phone screen with a Facebook logo in the central Bosnian town of Zenica, February 20, 2014. WhatsApp is much stronger than Facebook Messenger in Europe, Latin wall pictures America, Africa and Australia and has attracted users at a time when it appears that young people are turning away from Facebook. Facebook is paying more than double its annual revenue for a chat program that has little revenue