WhatsApp has been in the news over the past few days after the popular messaging service announced that it will start sharing phone numbers and other user data with Facebook. Facebook acquired WhatsApp for a whopping $22 billion in October 2014.
This is how Bloomberg reported the rationale of the deal at that time
The valuation of the deal was already regarded as lofty, at 19 times projected sales. Still, the results illustrate how far Facebook has to go to get its money’s worth for the app, which generates revenue by charging 99 cents for subscriptions after a user’s first year. Chief Executive Officer Mark Zuckerberg said he’s in no rush to make money from WhatsApp, or Facebook’s other growing applications, until they reach 1 billion users.
“The right strategy is to focus on connecting the people before aggressively turning them into businesses,” he said yesterday on a conference call to discuss Facebook’s third-quarter earnings. “Once we get to that scale, then we think they will start to become meaningful businesses in their own right.”
The chart below shows WhatsApp crossed one billion users in February. It comes as no surprise then that Facebook has started to think of the messaging service as a meaningful business in its own right.