The Biggest Threat to Facebook's $19 Billion WhatsApp Buy

In the video below, Motley Fool tech analyst Eric Bleeker and Max Macaluso discuss the future of messaging apps versus social networks, as well as investment-trend predictor Mary Meeker's latest slide deck, which shows the vastly different ways Facebook  (NASDAQ: FB  ) and Whatsapp users communicate.

David Sacks, founder/CEO of Yammer and COO/chief of product of PayPal, tweeted this back in February:

Basically, with Facebook, you're communicating with a large number of people, perhaps somewhat infrequently; with these messaging apps, you're communicating with a smaller but likely more intimate number of people on a more regular basis. 

Eric and Max discuss how well this observation helps explain Facebook's $19 billion buy of WhatsApp. However, another problem that arises is that while Facebook users are fairly locked in to the service, companies like WhatsApp that use a phone book for finding friends and contacts have few switching costs. That could make monetizing users in the space very difficult as they flee to new platforms when ads or other revenue opportunities are introduced. That's a significant risk that will be tested in the years ahead, as Facebook begins increasing WhatsApp monetization, which was close to non-existent when it purchased the company.  

To see the full discussion, watch the video below. 

Are you ready for this $14.4 trillion revolution?
Have you ever dreamed of traveling back in time and telling your younger self to invest in Apple? Or to load up on Amazon.com at its IPO, and then just keep holding? We haven't mastered time travel, but there is a way to get out ahead of the next big thing. The secret is to find a small-cap "pure-play" and then watch as the industry -- and your company -- enjoy those same explosive returns. Our team of equity analysts has identified one stock that's ready for stunning profits with the growth of a $14.4 TRILLION industry. You can't travel back in time, but you can set up your future. Click here for the whole story in our eye-opening report.


Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2982902, ~/Articles/ArticleHandler.aspx, 8/23/2014 2:31:46 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement