Trending

Filed under: News | Technology News

 

Ahead of the Bell: Facebook shares stumble

Feb 20 2014, 8:36am CST | by

1 Updates
Ahead of the Bell: Facebook shares stumble
 
 

YouTube Videos Comments

Full Story

Ahead of the Bell: Facebook shares stumble

Shares of Facebook slipped Thursday morning after the world's biggest social networking site surprised Wall Street by spending $19 billion on the messaging service WhatsApp.

Analysts that follow the company had mixed feelings on the deal, which Sterne Agee called strategically sound. But Pacific Crest Securities said it would have preferred to see Facebook grow organically, or at least act sooner on such acquisitions to avoid the sticker shock.

WhatsApp is a global messaging service for smartphones. It allows users chat with their phone contacts, both one-on-one and in groups, and well the sending of texts, photos, videos and voice recordings.

Facebook said Wednesday that it's paying $12 billion in stock and $4 billion in cash for the company. In addition, the app's founders and employees will be granted restricted stock worth $3 billion that will vest over four years after the deal closes.

The size of the deal dwarfs acquisitions made by other technology companies, such as Google's $12.5 billion purchase of Motorola Mobility or Microsoft's $8.5 billion acquisition of Skype.

Sterne Agee Arvind Bhatia said that WhatsApp comes with a large and rapidly growing user base that has a higher percentage of daily active users than Facebook.

Pacific Crest's Evan Wilson, however, said that it is hard to justify the valuation of both Facebook and WhatsApp if the social network does face significant competition from mobile messaging services. He noted that the company's acquisition of Instagram, its reported offer for Snapchat and the WhatsApp deal signify that it does.

Shares of Facebook Inc. slipped 2 percent, or $1.38, to $66.68 Thursday about a half hour before markets opened. But the shares are still up more than 20 percent this year.

Source: AP

 

You Might Also Like

Updates


Sponsored Update


Advertisement


More From the Web

Shopping Deals

 
 
 

<a href="/latest_stories/all/all/30" rel="author">Associated Press</a>
The Associated Press (AP) is one of the largest and most trusted sources of independent newsgathering, supplying a steady stream of news to its members, international subscribers and commercial customers.

 

 

Comments

blog comments powered by Disqus

Latest stories

Samsung outs colorful ad for Galaxy S5 and Samsung Gear
Samsung outs colorful ad for Galaxy S5 and Samsung Gear
The new ad by Samsung focuses on the new Galaxy S5 and Galaxy Gear features
 
 
Samsung to Launch Tizen Phones in Q2 and Android Wear Smartwatch Later
Samsung to Launch Tizen Phones in Q2 and Android Wear Smartwatch Later
Samsung Electronics is up to its good old tinkering ways once again. The company will be introducing at least two smartphones running on its own Tizen operating system in Q2 and an Android Wear smartwatch later this year.
 
 
Microsoft launches cheaper Office 365 Personal subscription
Microsoft launches cheaper Office 365 Personal subscription
Microsoft has come up with a cheaper subscription plan for Office 365 productivity suite
 
 
Samsung Gear Devices Now Compatible with 20 Galaxy Devices
Samsung Gear Devices Now Compatible with 20 Galaxy Devices
Samsung Gear 2 Gear 2 Neo and Gear Fit are now compatible with 20 Galaxy Devices.
 
 
 

The Hottest Photos of Victoria's Secret Fashion Show 2013