Most headlines surrounding Facebook's (NASDAQ: FB ) announcement to purchase WhatsApp focus on just how big the purchase was. Nineteen billion is no joke -- especially for a 55-employee company. But what else is interesting about Facebook's arrangement to purchase WhatsApp is the way the deal was structured.
With approximately $15 billion of this $19 billion deal in the form of common shares and restricted stock units, Facebook is essentially sharing a large portion of the risk in this very speculative deal with WhatsApp. This is excellent news for Facebook investors because even though WhatsApp is clearly on its way to 1 billion users in the near future, the app only had an estimated $20 million in revenue in 2013. If Facebook were to pay $19 billion in cash in a deal like this, there would be far more risk for Facebook investors. Of course, the fact that Facebook shares have soared about 150% in the last 12 months is a nice bonus too.
In the following video, Fool contributor Daniel Sparks takes a closer look at how Facebook shared risk with WhatsApp in this massive deal.
The next big thing in tech?
Every investor wants to get in on revolutionary ideas before they hit it big -- like buying PC maker Dell in the late 1980s, before the consumer computing boom, or purchasing stock in e-commerce pioneer Amazon.com in the late 1990s, when it was nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hypergrowth markets. The real trick is to find a small-cap "pure play" and then watch as it grows in explosive fashion within its industry. Our expert team of equity analysts has identified one 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.