And that’s when investors hit the no button and step out. When you are valued at growth multiples, any wobble in your user expansion rates implies that your future cash flows may be dramatically overvalued at current multiples. Facebook, though, is a maturing product that investors continue to expect much from in terms of both user and financial growth. Twitter has yet to make a similar transition, naturally. Over time, the company’s key metrics have become increasingly financial. Big growth? Check.įacebook continues to grow at acceptable levels. – Continued strong growth, currently adding more than 1 million new registered users per day. – Messaging volume approaching the entire global telecom SMS volume and – 70% of those people active on a given day – Over 450 million people using the service each month WhatsApp has built a leading and rapidly growing real-time mobile messaging service, with: Here’s Facebook itself explaining why WhatsApp is worth the tectonic sums it is deploying to purchase it: If Facebook has to spend so heavily to acquire user growth, its own core strengths of ubiquity, and high engagement are implicitly under stress. Instead, it’s likely that investors are displeased that Facebook bought growth, perhaps because it had to. They could be worried about potential dilution stemming from the deal.
Wall Street investors are seemingly not pleased and have sent Facebook’s shares down 5 percent in after hours trading. WhatsApp’s employees pick up an additional $3 billion in restricted stock units as part of the deal.
Facebook today announced that it will acquire WhatsApp for a combined $16 billion in cash and stock.
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