Many from Wall Street to Silicon Valley were stunned on Wednesday afternoon after Facebook said it was paying a total of $16 billion in combined cash and stock for WhatsApp, an Internet-based mobile texting app that circumvents the SMS messaging services operated by the telcos and has more than 450 million users around the world.
Facebook investors initially were not pleased at the staggering valuation the social media giant is paying for the Mountain View, Calif.-based company, which basically values each WhatsApp user at about $42 a customer. The deal also includes an additional $3 billion in restricted stock for the company’s employees, bringing the total value to as much as $19 billion. After first tumbling more than 5%, Facebook’s shares recovered slightly and were off about 3% in after-hours trading.
Facebook investors initially were not pleased at the staggering valuation the social media giant is paying for the Mountain View, Calif.-based company, which basically values each WhatsApp user at about $42 a customer. The deal also includes an additional $3 billion in restricted stock for the company’s employees, bringing the total value to as much as $19 billion. After first tumbling more than 5%, Facebook’s shares recovered slightly and were off about 3% in after-hours trading.