When WhatsApp was acquired in 2014 by Facebook, Mark Zuckerberg indicated that they would start monetizing the messaging platform once it reached a billion users. WhatsApp has gone way beyond that – 1.2 billion users, in fact – but apart from passing comments about the opportunity for businesses to reach out to their customers, there’s not even a hint of Facebook’s plans to cash in on the investment.
Earlier this month Facebook said at its fourth quarter earnings that WhatsApp’s user base had crossed 1.2 billion, and that over 50 billion messages were being sent every day. But even at the earnings call, nothing was said other than that WhatsApp and Facebook Messenger have very different value propositions, with the former offering a more “stark experience.”
But the problem is, the longer Facebook waits before monetizing WhatsApp, the more expensive it’s going to be just to run the operations.
Moreover, the original acquisition included quite a bit of equity. As the shares and RSUs (restricted stock units) vest over time, it dilutes earnings. That means more burden on investors than necessary.
At the time of the deal, this is where things stood:
“Goodwill generated from the WhatsApp acquisition is primarily attributable to expected synergies from future growth, from potential monetization opportunities, from strategic advantages provided in the mobile ecosystem, and from expansion of our mobile messaging offerings.”
Now, Facebook is already trying to justify the high cost of the acquisition, saying in their 10-K filed this month that “As of December 31, 2016, no impairment of goodwill has been identified.”
Even so, the fact still remains that WhatsApp single-handedly accounted for $15.3 billion in goodwill after they closed the deal in 2014. That’s still weighing heavily on the balance sheet.
It’s time to start monetizing, there’s no doubt about that. All that Facebook needs to do now is solidify their plans for WhatsApp monetization and then execute the plan the way they did with Messenger.
It might be a lot more challenging, but the company has had two years to mull it over and figure out the best way forward. We think it is now time for Facebook to make its move and let its investors in on the monetization plan for WhatsApp.
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