Why $16B for WhatsApp Isn't Ridiculous
This tweet by Espen Antonsen about Microsoft’s 1997 acquisition of Hotmail got me thinking about acquisition costs per user, so I ran the numbers for other social network acquisitions.
It turns out that Facebook’s purchase of WhatsApp at $35.56/user ($42.22/user if we also include the $3B in RSUs) is in line with average acquisition costs of $35-$40/user.
| Target | Acquirer | Date | Amount ($M) | Users (M) | Cost / User |
|---|---|---|---|---|---|
| Hotmail | Microsoft | 12/31/97 | $400 | 9 | $44.44 |
| Geocities | Yahoo | 1/28/99 | $3,600 | 19 | $189.47 |
| Flickr | Yahoo | 3/25/05 | $25 | 1.5 | $16.67 |
| MySpace | News Corp | 7/1/05 | $580 | 20 | $29.00 |
| Skype | eBay | 10/1/05 | $3,100 | 50 | $62.00 |
| Delicious | Yahoo | 12/12/05 | $15 | 0.3 | $50.00 |
| YouTube | 10/9/06 | $1,650 | 50 | $33.00 | |
| Skype | Microsoft | 10/13/11 | $8,500 | 188 | $45.21 |
| 4/12/12 | $715 | 30 | $23.83 | ||
| Tumblr | Yahoo | 5/20/13 | $1,100 | 30 | $36.67 |
| 2/19/14 | $16,000 | 450 | $35.56 |
Sources: