WHAT’S THE TAKE ON
According to analyst consensus forecast on FT.com, analysts are positive on the future of Facebook. Of 57 analysts polled, 42 either rate it as a ‘Buy’ or ‘Outperform’, 14 rate it as a ‘Hold’ and a single analyst considers it a ‘Sell’. for over 80% of the company’s R500bn market cap), have a reported combined user base of over 1bn, mostly in China. WeChat is also making substantial headway in Africa.
Littlewood says: “Globally, WhatsApp dwarfs its competitors, so ultimately the $19bn that Facebook is shelling out is really about advancing a business strategy that Facebook has had in a place for a At $19bn, WhatsApp’s acquisition price is not only steep, it’s unprecedented – the largest sum ever paid for a venturecapital-backed company. Experts have balked at the price, not only due to the amount itself but because a $19bn valuation for a company that appears to make less than $500m in annual revenue (it charges users $0.99 a year for the service, following a one-year free trial) seems to have come out of nowhere.
Thus WhatsApp joins YouTube, Instagram, Snapchat and Siri in a league of start-ups with multimillion-dollar valuations that appear both noticeably high and arbitrarily assigned, and have been bought by large-scale media conglomerates before producing a cent in revenue.
Yet sizeable acquisition numbers like that of the Facebook-WhatsApp deal need to be viewed in relation to Facebook’s current business and the value attributed to each user. At 450m users, WhatsApp’s price tag translates to around $40 per user, the same price that Microsoft paid for Hotmail in 1998 and cheaper than Twitter ($83.53), LinkedIn ($84.95) and Facebook ($141.32), at the time of their respective IPOs. As Adrian Saville, CIO and founder of Cannon