March 16, 2013 | In: Technology

How Much Is WhatsApp Worth?

In case you don’t know – WhatsApp is the mobile app that has literally killed SMS (and MMS) – especially international SMS (which traffic has been reduced by 80% to 90% according to conservative reports because of WhatsApp). WhatsApp also made the BlackBerry Messenger service (BBM) obsolete because it really did everything that this service was doing – and more!

With WhatsApp, you can send your family members/friends/colleagues (who are also on WhatsApp) text messages, movies, images, etc… There is no limit to how many things that you can send/day and the app is super cheap for $1 (everytime my subscription is about to expire, they renew it for free, which is odd, because I have no problem at all paying a dollar for such a wonderful app).

According to Google Play, WhatsApp has more than a 100,000,000 users (that’s a hundred million) – I suspect the number to be between 200 to 300 million users. Anyone who used/is using SMS is now using/will be using WhatsApp.

Now, assuming that WhatsApp has 200 million users as of March 2013, how much is WhatsApp worth?

Well, let’s see – they are charging $1/year for every user (which is an excellent strategy – reduce your price and sell more, much more!) so this means that for 200 million users (assuming additional subscriptions will make up for churn) they will make $200 million/year. Since it’s a technology company, then I think 5 x EBIDTA is a reasonable price for this company, which is $1 billion.

Now, the number above is very conservative. For example, I think that LinkedIn is worth about a billion, but it’s currently valued at $20 billion.

I do think that WhatsApp is there to be sold to someone (or some company) and I am confident that they’re not making money at the moment (they just want more users so that they can be of a higher value when they are sold). I do not think they’ll wait for more than a year to sell their business.

Let’s see…

Note 1: WhatsApp is not a public company – and if they go public, then most likely it’ll be the dawn of public listing of mobile apps, which will highly inflate this whole market…

Note 2: WhatsApp claims that it will never run ads on the app – which is great, but I’m not confident that whoever buys their company will have the same feeling about putting ads there somewhere. Sure, it’ll be insulting to see ads on a paid app – but everyone is doing it and that app only costs a dollar.

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