Facebook (FB) announced it is buying mobile messaging startup WhatsApp for $19 billion in cash and stock. WhatsApp has 450 million monthly users, which is more than Twitter's 240 million users. Twitter (TWTR) is valued at $30 billion. The app allows users to send text, pictures and video to anyone with the software for free. Some market watchers may see this acquisition as a sign of desperation on Facebook's part to try and regain its popularity with young users which the company admits is a demographic that has been declining.
One stock reaping the benefits from Facebook’s acquisition of WhatsApp is BlackBerry (BBRY), whose shares were up more than 5% in early trading. The $19 billion acquisition of WhatsApp has investors re-evaluating BlackBerry Messaging, also known as BBM, which still remains popular even though BlackBerry's devices have waned in popularity.
Technology analyst Rob Enderle told CNBC this morning that Facebook's acquisition of WhatsApp is a desperate move to get its user count up by buying companies that have users.
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Enderle also said the move reminds him of the strategies of the dotcom era and that gives him the chills. Yahoo! Finance Senior Columnist Michael Santoli believes Facebook has to go after large pools of younger users. “I don’t know if this is the right asset to buy,” Santoli said. “But I do think it’s probably the right approach when you have a stock where [Facebook] is trading”.