Facebook's $21.8 billion acquisition lost $138 million last year
WhatsApp reported
a meager $10.2 million in revenue last year, according to a filing with
the Securities and Exchange Commission.
There
was never any doubt that Facebook's acquisition of WhatsApp — now
valued at $21.8 billion — was about gaining users before profits. And
still, a new regulatory filing lays bare the profound unprofitability of
the messaging service for which Facebook traded a full tenth of its
market value.
WhatsApp reported a meager $10.2 million in revenue last year, according to a filing with the Securities and Exchange Commission. The money presumably came from charging some users $1 a year to use the mobile application, which lets users share text messages and images, since WhatsApp does not allow advertising.
To generate that revenue, WhatsApp spent heavily across the board. Research and development at the startup, which employed just 55 people at the time it was sold, totaled $77 million, a figure that includes some salaries. General and administrative costs amounted to $18.6 million. In total, WhatsApp spent about $149 million last year, resulting in a net loss of $138 million. That far exceeds the net loss reported in 2012, a relatively modest $55 million.
For this, Facebook offered $4 billion in cash and $12 billion in stock, with the company's founders eligible for an additional $3 billion in restricted stock. But as Facebook's own stock has continued to rise, so has the value of the deal. The final tally came in at $21.8 billion.
Of course, Facebook can afford to spend lavishly. Since announcing its acquisition of WhatsApp, Facebook stock has risen 20%, giving it a market value of $208 billion. Investors appear unfazed by founder Mark Zuckerberg's willingness to make huge bets on money-losing companies, instead trusting Silicon Valley logic over conventional measures of corporate worth.
And acquiring WhatsApp was never about making money for Facebook, at least not yet. Instead, Zuckerberg was enticed by the company's swift accumulation of 450 million users at the time of purchase. "Services in the world that have 1 billion people using them are all incredibly valuable," Zuckerberg said on a conference call at the time of the deal, anticipating further growth.
WhatsApp's audience may indeed be valuable to Zuckerberg. But at this rate, it will take a couple of millennia for the company to make back its purchase price. Using one common measure by which deals are assessed, Facebook may have set a new record of sorts. Based on the data in the new filing, Zuckerberg's company paid about 2,000 times annual revenues for WhatsApp.
WhatsApp reported a meager $10.2 million in revenue last year, according to a filing with the Securities and Exchange Commission. The money presumably came from charging some users $1 a year to use the mobile application, which lets users share text messages and images, since WhatsApp does not allow advertising.
To generate that revenue, WhatsApp spent heavily across the board. Research and development at the startup, which employed just 55 people at the time it was sold, totaled $77 million, a figure that includes some salaries. General and administrative costs amounted to $18.6 million. In total, WhatsApp spent about $149 million last year, resulting in a net loss of $138 million. That far exceeds the net loss reported in 2012, a relatively modest $55 million.
For this, Facebook offered $4 billion in cash and $12 billion in stock, with the company's founders eligible for an additional $3 billion in restricted stock. But as Facebook's own stock has continued to rise, so has the value of the deal. The final tally came in at $21.8 billion.
Of course, Facebook can afford to spend lavishly. Since announcing its acquisition of WhatsApp, Facebook stock has risen 20%, giving it a market value of $208 billion. Investors appear unfazed by founder Mark Zuckerberg's willingness to make huge bets on money-losing companies, instead trusting Silicon Valley logic over conventional measures of corporate worth.
And acquiring WhatsApp was never about making money for Facebook, at least not yet. Instead, Zuckerberg was enticed by the company's swift accumulation of 450 million users at the time of purchase. "Services in the world that have 1 billion people using them are all incredibly valuable," Zuckerberg said on a conference call at the time of the deal, anticipating further growth.
WhatsApp's audience may indeed be valuable to Zuckerberg. But at this rate, it will take a couple of millennia for the company to make back its purchase price. Using one common measure by which deals are assessed, Facebook may have set a new record of sorts. Based on the data in the new filing, Zuckerberg's company paid about 2,000 times annual revenues for WhatsApp.
You Need any soft-skills Training with placement just contact us Contact number : 8904762432. Website: www.moxiestars.com. Facebook:https://www.facebook.com/moxiestarssolutions. LinkedIn : Moxiestars. Email: info@moxiestrars.com.
For Insurance :8904762432.
Hi guys If u like this post please leave a comment in comment box... comment box will top right of every post and bottom of every post. its useful for me give a better information.. check top of the blog there is menu bar in that go to comments i replied for u r comments because there is no direct option for reply for u r comments. if u want to give any suggestion in bottom of blog there is contact information option please leave a msgs with u r mail id sure i will get u.
.
0 comments:
Post a Comment