By Mrugesh Dave '18
On February 21, 2014, Facebook purchased mobile messaging app WhatsApp for $22 billion. Many argued the purchase was for an exorbitant amount despite the app’s 600 million-user base. Now, with Facebook’s unveiling of WhatsApp’s revenue in the past two years, it seems they may be right.WhatsApp generated just $15 million in revenue on the first half of this year on a loss of $230 million. This is a far larger net loss than the $138 million loss at the end of last year. These numbers raise alarm as to how the app will become a moneymaker for Facebook. So far, much of WhatsApp’s revenue comes from its offer of a 99-cent subscription after one year of free use. However, Facebook has not pushed the app to charge the fee to all users.Instead, WhatsApp CEO Jan Koum contends that the app stopped focusing on generating revenue after Facebook acquired it and rather aims to attract an even larger user base to ultimately become the largest international messaging app. “Over the next few years our focus will continue to be on growth,” Koum says in hopes that the app reaches one or two billion users. Once the user base is high enough, Facebook CEO Mark Zuckerberg claims he will then focus on how to monetize the app.Clearly, Zuckerberg values growing a user base a great deal, as he broke down the $22 billion WhatsApp acquisition: $2 billion for the users, $450 million for the brand, $288 million for the technology, and the final $15 billion as “good will” for future growth and potential opportunities for monetization.However, many investors are wary of how exactly the app will make money. As a result, Facebook’s shares have fallen 10% since Tuesday October 28 when Zuckerberg released the concerning information on WhatsApp. It seems that Facebook must devise a plan to appease investors on the WhatsApp problem for a stock price recovery and steady growth. Sourceshttp://www.bloomberg.com/news/2014-10-28/facebook-posts-third-quarter-revenue-exceeding-analyst-estimates.htmlhttp://www.bloomberg.com/news/2014-10-28/facebook-s-22-billion-whatsapp-deal-buys-10-million-in-sales.htmlhttp://techcrunch.com/2014/10/28/whatsapp-revenue/http://blogs.wsj.com/digits/2014/10/28/whatsapp-lost-230-million-in-first-six-months-this-year/?mod=ST1http://blogs.wsj.com/digits/2014/10/29/facebook-is-the-easy-growth-over/?mod=ST1Photohttp://chillingcompetition.com/2014/02/21/whatsapp-facebook/