Upon hearing that Facebook (NASDAQ:FB) is acquiring WhatsApp, BlackBerry (NASDAQ:BBRY) shares rallied on the confirmation that there is significant value in message services. One of BlackBerry's key turnaround hopes is BBM. The WhatsApp deal values each user at approximately $42, which implies that BBM would be worth nearly $3.4 billion based on its 80 million users. However, that comparison is rather misleading, since BBM has significantly fewer users than WhatsApp and network effects are precisely what create value per user.
There is absolutely some validity that messaging platforms are worth more now than ever before, but each platform is entirely different. BBM doubled its registered user base after offering cross-platform support for Apple iOS and Google Android, but chances are that user growth will slow after that initial spike. Perhaps BlackBerry can sell its underlying BBM technology as a better way to recoup some value.
In this segment of Tech Teardown, Erin Kennedy discusses BlackBerry's misplaced jump with Evan Niu, CFA, our tech and telecom bureau chief.
The next big thing in tech
Let's face it, every investor wants to get in on revolutionary ideas before they hit it big. Like buying PC-maker Dell in the late 1980's, before the consumer computing boom. Or purchasing stock in e-commerce pioneer Amazon.com in late 1990's, when they were nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hyper-growth markets. The real trick is to find a small-cap "pure-play", and then watch as it grows in EXPLOSIVE lock-step with it's industry. Our expert team of equity analysts has identified 1 stock that's poised to produce rocket-ship returns with the next $14.4 TRILLION industry. Click here to get the full story in this eye-opening report.
Erin Kennedy owns shares of Apple. Evan Niu, CFA owns shares of Apple. The Motley Fool recommends Apple, Facebook, and Google. The Motley Fool owns shares of Apple, Facebook, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.