It's Unanimous: Facebook Buying WhatsApp Is The Best Or Worst Deal Ever

Feb 20 2014, 3:42pm CST | by

It's Unanimous: Facebook Buying WhatsApp Is The Best Or Worst Deal Ever
Photo Credit: Forbes Business

Big deals tend to provoke big reactions, and they don’t come much bigger than Facebook’s $19 billion purchase of WhatsApp.

Was it a genius move on Facebook’s part, or a sign that the social network is about to crater? Did Facebook get a bargain, or did WhatsApp’s founders Jan Koum and Brian Acton bilk them for undeserved billions?

Yes, yes, yes and yes.

Which is to say that opinions are all over the place. Some folks just can’t wrap their minds around the brute fact that Facebook thinks an app with minimal revenue is worth more than American Airlines, UnderArmour, Xerox or Moody’s.  Analyst Rob Enderle says Facebook “massively overpaid” and calls it ”a desperate move” motivated by panic about slowing user growth. USA Today’s Jon Swartz calls the whole thing “downright silly.” On Yahoo Finance, Aaron Pressman argues that the deal makes no sense because it “doesn’t solve Facebook’s real problems, which involve building a bigger audience to attract more advertisers, learning its audience’s wants and desires to attract more advertisers, and keeping its audience engaged to— you guessed it — attract more advertisers.”

Over on Seeking Alpha, the pans are even more hyperbolic, with Lenny Grover calling WhatsApp “the GeoCities of Bubble 2.0″ and Stock Traders Daily calling it “one of the worst deals I have ever seen.”

But a preponderance of sober opinionizers seem to think Facebook has the right idea. BTIG’s Rich Greenfield says the acquisition “appears to be a logical decision that will bear long-term fruit, even if the ROI is far from clear today.” Brian Pitz and Brian Fitzgerald of Jefferies Equity Research liken it to Google’s purchase of YouTube: “Whereas YouTube was potentially disruptive to the global video ecosystem, WhatsApp could disrupt the global paid messaging industry.”

Gizmodo’s Eric Limer thinks it’s a slam dunk for Facebook: “It’s now poised to own the best way to chat on a smartphone and win the kiddies back all at once.” Our own Eric Jackson thinks the only error in judgement was on the part of Koum and Acton, who should have held out for a few more years. Why? Because $19 billion is nice “but $200 billion is more.”

But my favorite take of all comes from Henry Blodget, who offers this delightful koan-like hedge:

Facebook buying WhatsApp for $19 billion isn’t a brain dead move.

It’s just bold.

Very bold.

Like other bold moves, Facebook’s WhatsApp deal could end up looking brilliant.

Or moronic.

That’s what makes it bold.

And what does the market think? After some initial sticker shock, it seems mildly enthusiastic: Facebook shares are up almost 2% today.

The Evolution Of Facebook

Source: Forbes Business

 
 

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