Facebook Values WhatsApp Like Miracle Drug: Real M&A (Bloomberg)
Facebook Inc.’s $19 billion purchase of WhatsApp Inc. is valuing the text-messaging service at a multiple investors currently only bestow on companies developing life-saving drugs.
Based on a goal of reaching 1 billion WhatsApp subscribers, Facebook is buying the mobile application for about 19 times estimated sales, according to data compiled by Bloomberg. The only U.S. companies that fetch such lofty valuations are drugmakers that are developing treatments for cancer, Crohn’s disease and other ailments, the data show.
While the price tag may seem steep at first blush, Facebook is betting it will prove a lucrative long-term investment. The mobile-messaging service could help Facebook generate more growth from younger users that are slipping away, according to FBN Securities Inc. The dollar amount being paid per WhatsApp user is about a third the value Facebook shareholders place on the social media company’s own user base, data compiled by Bloomberg show.