The social media kingpin, Facebook, made national news last week by purchasing the mobile messaging application WhatsApp for a stunning $19 billion; however, based on the potential of the application, Facebook’s investment may pay off sooner rather than later.
The WhatsApp application allows users to communicate messages via their mobile browser. Essentially, the application acts as a cost-effective alternative to text messaging. Users are able to send and receive messages, pictures, audio notes, video messages and coming soon, voice calls.
What’s up with WhatsApp?
- 450 million users
- More than 600 million photos sent per day
- 70 percent of users active every day
- 19 billion WhatsApp messages sent per day
- Growing by one million users every day
- Valued at $42 per user (Instagram was $33 per user when purchased by Facebook in 2012)
The obvious value of the Facebook purchase lies in how fast WhatsApp’s user base continues to grow. Currently, the application has 450 million users and is adding around one million users a day. The application has the potential to reach one billion users by as earlier as next year.
Even more attractive is WhatsApp’s strong presence in regions where Facebook is looking to grow its user base such as Latin America, Europe and India. In addition, the application is very popular among teenagers and young adults, many of whom have been leaving Facebook messaging for other popular alternatives including attempted Facebook purchase, Snapchat.
This acquisition should be a potential match made in heaven because WhatsApp offers a personal interaction between users that Facebook doesn’t. However, the application offers little opportunities for revenue. With no advertising revenue, the only income from the application is the $1 per year subscription fee that goes into effect after a free first year of use.
It is too soon to tell if the WhatsApp purchase will be a success or failure for Facebook. However, the purchase does put Facebook back at the heart of smartphone communication and shows us that the company is committed to staying on top in the vast sea of social media competitors.
What do you think about the purchase, smart, forward thinking by Facebook, or is it too risky of an investment?