Upon hearing that Facebook (NASDAQ:FB) is acquiring WhatsApp, BlackBerry (NYSE:BB) 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.