Facebook stock hits record high after $19bn deal
INVESTORS warmed to Facebook’s $19bn (£11.4bn) takeover of mobile messaging app WhatsApp last night as shares touched a record high of $70.11 during trading, valuing the social network at nearly $180bn.
Investors’ initial fears that the social network, led by chief executive Mark Zuckerberg, may have overpaid for a chat app that has little revenue appeared to have been eased.
While two US brokerages downgraded their recommendations on Facebook to hold, the overwhelming majority of analysts remained positive on the stock.
“To understand Facebook’s rationale, the focus must be on the cost of Facebook not buying WhatsApp rather than the price Facebook paid for WhatsApp,” said IHS mobile analyst Jack Kent.
“Facebook could not risk WhatsApp’s 450m monthly and 315m daily active users falling into the hands of a competitor, such as Google,” added Kent.
Facebook generated over $1bn from its mobile app last quarter, an advertising platform it launched just a year ago. WhatsApp opens questions around how Facebook could turn it into another major revenue source, albeit without advertising which Zuckerberg has ruled out.
BlackBerry also saw its share price jump nearly four per cent to $9.35 as the recent attention surrounding mobile messaging applications – on Sunday Viber was bought by Rakuten for $900m – led investors to re-evaluate the struggling smartphone maker’s BBM messaging platform.
Shares in Facebook closed 2.3 per cent higher yesterday at $69.63.