Home Business NewsTech News Facebook’s market cap reduced by billions after WhatsApp deal

Facebook’s market cap reduced by billions after WhatsApp deal

by LLB Editor
21st Feb 14 9:28 am

Facebook’s eye-watering $19bn deal to buy WhatsApp resulted in a 3.4% dip in the social network’s shares.

In a note to clients, Brian Wieser, senior analyst at Pivotal Research, said: “While we see strategic merit, the acquisition is difficult to justify on metrics we use to value Facebook. A separate re-assessment of ad revenues for the core business was leading us to raise expectations, but dilution due to WhatsApp partially offsets these changes.”

WhatsApp is getting $4bn in cash, $12bn in Facebook shares and $3bn in restricted stock that its management will receive over the next four years.

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