20th February 2014
Despite the huge price tag, technology fund manager Walter Price says Facebook’s $19bn purchase of WhatsApp should make the firm more valuable.
The website is buying the mobile messaging service WhatsApp for a $12bn share and $4bn cash deal and up to $3bn in restricted stock as the Daily Mail reports.
Price, manager of the RCM Technology investment trust, says: “We think this is a follow-on to the strategy discussed in the most recent conference call by CEO Mark Zuckerberg to have multiple products that are used by billions of people, that are in the Facebook family. Just like the purchase of Instagram, which has given Facebook the lead in visual messaging, Whatsapp has the potential to give Facebook the lead in audio messaging.
“Each makes the Facebook family more powerful and more valuable. This also reduces the risk from Ten Cent’s We Chat and Naver’s Line to pull users away from Facebook. While the price seems high, the company does have 450 million monthly users and is adding 1 million new users a day. We have seen the success of We Chat add at least $40 billion to Ten Cent’s market value over the last year, and this acquisition has the potential to do the same for Facebook.”