WhatsApp Price too High, Say Estonian Experts (3)

(AFP/Scanpix)
2/21/2014 11:10 AM
Category: Economy

Head of Nortal's eHealth department, Taavi Einaste, and LHV's analyst Vallo Lees said the reported 19 billion dollars (14 billion euros) that Facebook is spending to buy the phone application WhatsApp seems a very high price to pay.

WhatsApp is an instant messaging program, allowing users to send free text messages via smart phones.

“The price is unbelievably big and certainly WhatsApp's financial results do not explain such a price,” Einaste told ERR on Thursday.

He said that the 450 million WhatsApp users must have posed a real threat to Facebook.

Lees said the take-over caused ripples all over the financial world, mostly due to the high price.

He said it is unclear how the app makes money, as an annual membership fee is only 0.99 US dollars and the first year is free, adding that a company with a maximum turnover of 450 million dollars (330 million euros) is not worth 19 billion dollars.

In comparison, Microsoft paid 8.5 billion dollars (6.2 billion euros) for Skype in 2011.


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