Recode reports that WhatsApp is now hiring for positions that specifically focus on monetization. One position, a product manager for monetization, is directly tasked with developing products that will contribute to monetization. In the description, WhatsApp is looking for a candidate that “has an empathy for both consumers and businesses” and can “unlock the potential of WhatsApp to serve millions of businesses.” This all hints at WhatsApp’s plans to help businesses connect with consumers; Facebook Messenger will use a similar model.
Messenger and WhatsApp are both messaging platforms, so the two services’ revenue models will likely resemble each other as Facebook continues to plot its strategy. The main difference is geographical: WhatsApp is hugely popular in emerging markets and effectively a replacement for traditional SMS text messages, while Messenger is more popular in developed markets like the U.S. Messenger added peer-to-peer (P2P) payments a long time ago, and reports surfaced in April suggesting that WhatsApp was looking to create a P2P payments service for India.
The news comes following a setback in China, which has started blocking and censoring parts of the service. WhatsApp is not officially banned like Facebook’s core platform, Facebook’s Instagram subsidiary, or Twitter, but it’s not much of a stretch to think it could be soon.
I’m generally bullish on Facebook, but I remain skeptical of the WhatsApp deal even now, three years after the fact. WhatsApp is Facebook’s largest acquisition to date — by far.
Data sources: Facebook and media reports. Chart by author. *Not disclosed officially but estimated based on media reports.
And WhatsApp’s financials at the time of acquisition were covered in red, losing $312 million on $23 million in revenue over the prior 12 months. There was hardly any book value to speak of, which is why nearly all of the purchase price was assigned to goodwill and net intangible assets. Put another way, Facebook paid more for WhatsApp in 2014 than Twitter is worth today. Twitter hasn’t exactly been an outperforming investment, but as a business it has brought in $2.5 billion in revenue over the past year (losing $439 million in the process).
As a shareholder myself, I don’t want this time bomb to explode, but I’m still afraid it will at some point. I’m slightly relieved that Facebook is now putting some more serious effort into building WhatsApp as a business.
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