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Why Apple, not Facebook, should have bought WhatsApp

Pras Subramanian

Facebook’s (FB) Mark Zuckerberg is quickly making a reputation for himself as a CEO ready to put his money where his mouth is. Pundits thought he was crazy to spend big dollars on the trendy photo-sharing app Instagram. Now a massive $16 billion bid for messaging app WhatsApp has investors shaking their heads again, with the stock lower today after hitting an all-time high yesterday.

Still, we are left to wonder if Zuckerberg is on to something, and many believe $16 billion for a messaging app is a good buy, one focused on explosive growth.

Over four hundred and fifty million worldwide Whatsapp users are nothing to sneeze at. Analyst Rich Greenfield of BTIG noted on CNBC this morning, “it gives Facebook a tremendous share of time spent on mobile devices, not just in the U.S. but globally when you tack on Facebook plus Instagram plus WhatsApp.”

The growth story is huge, but Jon Najarian of optionMONSTER says its also a great defensive play, one that hurts Apple the most.

“Apple has the equivalent of a stealth bomber, and they’re sitting there using slingshots to do what they’re doing [in terms of acquisitions]. They should have been in here, knocking on the door,” of WhatsApp, Najarian says.

Indeed, with its iTunes marketplace and “600 million user base that pays them for stuff,” Najarian feels Apple “could be Netflix (NFLX), they could be Facebook, they could be all these things, but they’re not aggressive” when it comes to leveraging and growing a user base that actually pays for things like apps and content.

Najarian blames an “ancient” board of directors for not being aggressive, and letting Tim Cook sit there and “twiddle” his thumbs. Apple is sitting on over $140 billion in cash, and the argument could be made that $16 billion for WhatsApp is a little rich, but what about the cost of being too late to the growth game?

“It’s not too late” for Apple to make a move at this point, Najarian says. Indeed, rumors of Apple kicking the tires on Tesla (TSLA) had many investors, and Apple fanboys, giddy for such a merger. But Apple has to do something real, “they have to make moves in social,” Najarian notes, “otherwise they become Microsoft (MSFT).”


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