Facebook Buys WhatsApp for $19 Billion

whatsappp In what appears as a desperate move to many financial analysts, Facebook Inc. has bought WhatsApp Inc. for $ 19 billion. The deal consists of $4 billion cash, shares of facebook worth $12 billion and $3 billion restricted shares to WhatsApp founders and employees. In addition, WhatsApp co-founder and CEO Jan Koum will join the Facebook board.

WhatsApp is a messaging app that has experienced increased growth in the number of its users since its launch. Currently, the app enjoys a daily usage of about 450 million users globally and has an approximated 1 million sing-ups every day.

The revenue stream for WhatsApp comes from the $1 annual subscription fee charged to its users although a free version of the same app is available.

In the past, Facebook bought Instagram for about $ 1billion, thus making the buy out of WhatsApp its biggest acquisition so far. Last year, Facebook offered $3 billion to buy a photo-sharing mobile app Snapchat but the offer was rejected.

For the founders of the 5 years old WhatsApp Inc., it’s a case of creating billions overnight, even as other analysts cast a dark cloud over the buy-out.

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