Why Facebook bought Whatsapp for 19 Billion Dollars?

Facebook has surprised the world with the news of its latest acquisition of fast growing cross platform mobile messaging start-up Whatsapp. According to the reports, Facebook has spent $19 billion to buy Whatsapp, which certainly raises many eyebrows. The discussion is still on whether Facebook over paid in its bid in order to stay close to mobile communication and increase the number of young users. No matter what it is, with this acquisition Whatsapp continues to be the crucial differentiator for Facebook.

 
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Rumours are indicating towards the fact that Facebook was losing its appeal within the younger generation, while Whatsapp was becoming more convenient mode of socializing and messaging, which probably have acted as the prior reason behind the social media giant’s acquisition of instant mobile messaging service Whatsapp. The deal includes $12 billion in Facebook stock, $4 Billion in cash and up to $3 billion in the restricted Facebook stock units to be given to the Whatsapp founders and the rest 55 employees over a period of four years.

Since the very beginning, Facebook has mostly stumbled while it tried to be ever present in the mobile phones. But, as now the scenario is going to change with the acquirement of Whatsapp, it seems as if Facebook is finally going to breath easy on the cell phones.

$19 billion is indeed a lot of money but there are several reasons which make this buy out worthy for Facebook. Whatsapp has an estimated 450 million monthly users, while most of them use this app at every instant. If we look at the estimated number of users for Whatsapp, it is almost half of what Facebook itself has. Now when both come under one roof, Facebook becomes ubiquitous. In addition, Whatsapp brags of having 1 million registered users per day, which makes it the fastest growing messaging application so far.

Another point that is certainly going to work in favour of Facebook is the several Whatsapp users who are not already a Facebook user. Whatsapp users are spread across the world and helps people connect across multiple platforms and now Facebook can also reach them in no time. It is also to be noted that messages sent through Whatsapp is almost approaching the entire global telecom SMS volume.

Recently there has been much talk about the fading popularity of Facebook, despite that the company does not seem to be in much trouble. However, to ensure the increasing popularity in the long run $19 billion seems to have been a small price. Investors across the globe appears little wary of the deal, as the shares went down almost 3% in after-hours trading.

However, with this deal everyone is looking forward to a Universal service, a service that connects anyone and everyone and is extremely easy to use and works excellent on all the devices.