Please ensure Javascript is enabled for purposes of website accessibility

Don't Get Too Excited, BlackBerry

By Erin Kennedy and Evan Niu, CFA – Feb 23, 2014 at 6:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

BlackBerry jumps on news that WhatsApp is selling for $19 billion. Is this move misplaced?

Upon hearing that Facebook (META 2.53%) is acquiring WhatsApp, BlackBerry (BB 2.36%) 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.

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. 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.

Stocks Mentioned

BlackBerry Stock Quote
BlackBerry
BB
$5.20 (2.36%) $0.12
Meta Platforms Stock Quote
Meta Platforms
META
$123.49 (2.53%) $3.05
Alphabet Stock Quote
Alphabet
GOOGL
$100.44 (-0.55%) $0.55
Apple Stock Quote
Apple
AAPL
$147.81 (-0.34%) $0.50

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.