5 Reasons Why Facebook Decided To Acquire Whatsapp

You might find Facebook’s decision of buying Whatsapp for 19 Billion, Appalling. Not only you, the news sent ripples through the whole Invest Banking and Silicon Valley industries. Whatsapp was initially valued at 1.3 Billion according to it’s current revenue scenario. If you take further growth out of the formula and 1$/Year as it’s only revenue model, it would take 100 years for Facebook to recover it’s investment.

Whatsapp

What made Mark and Co. to stake up 20% of his company’s Market capitalization value to acquire Whatsapp? I have enlisted a few insights and personal opinion below.

Growth

Mark Zuckerberg revealed that he was intrigued by the growth of Whatsapp in just a few short years. It has already garnered a massive userbase of 450 million active users (Excluding Fake and Inactive registrations), While Facebook only has a cumulative userbase of 1.2 billion. Considering the fact that it has already been a decade since Facebook was launched publicly, the growth figures of Whatsapp are indeed astounding.

Monopolization

It is clearly evident that Whatsapp has already dominated Facebook in mobile messaging arena. It can be seconded by the fact that, Whatsapp has more downloads from the Google play store compared to Facebook messenger. Taking the growth rates into account, there is no possibility of Facebook dominating the latter in the mobile arena. With this acquisition, it can monopolize the whole Social networking market.

Revenue Model

FB Inc. incurred a major drop in it’s market value due to increase in it’s mobile users. Mobile based advertising is still in infant stage. There are a lot of obstacles to overcome. The first and the major one is compatibility issues. It’s revenue is significantly low compared to it’s Desktop advertising revenue. With possible integration of Whatsapp, it could set a new trend in personalization of advertising.

Income

Although as I’ve specified in the beginning, it would take 100 years for Facebook to recover it’s investment if we take growth out of the question. However, due to it’s incredible growth of 1 Million users / Day and new revenue streams sweeping in after possible integrating with the biggest social networking site, it could be a major source of income for FB Inc.

SnapChat

Mark seems to have a serious crush on SnapChat. He has a quoted a whopping amount of 3 Billion as an offer to acquire the few months old messaging start up. Ever since his proposal was rejected, he was striving hard to replicate the app himself. He even designed a new app called Poke, with expiring messaging, photo sending features. Unfortunately, it didn’t seem to perform well.

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Jeremy is a technology blogger. He loves to blog about blogging, business, gadgets, social media, latest tech news and wordpress .