The WhatsApp Acquisition in Context

There’s already been a lot written about Facebook’s $19B acquisition of WhatsApp. While some are bullish on the deal, others can’t seem to get over the amount Facebook has spent.

Some have compared the price to the GDP of Ukraine. Others have compared it the cost of funding the Iraq War.

One key aspect required to understand the valuation of WhatsApp is putting their user base into context. In Facebook’s September 2013 earnings filing, they stated they had 1.19 billion monthly active users (MAUs) of which 728 million were daily active users (DAUs). Contrast that with WhatsApp which says it has 450 million MAUs of which 320 million are DAUs.

If we dive a little deeper we see that WhatsApp has about 38% of the MAUs and 44% of the DAUs that Facebook has. Not bad for a company only valued at 10% of Facebook’s $173B valuation. Overall Facebook paid about $42 per MAU. How does this compare...