Financial reports for WhatsApp have recently been made public, and the it appears that the company is nowhere near the definition of profitable for the third quarter of 2014. Analysts are following the company closely as details of its recent US$16 billion acquisition by Facebook were also revealed in the reports; a price tag that appears to exist because the social networking service thinks WhatsApp should cost that much.
The total net loss of US$138 million was not entirely due to mis-management of funds. Almost US$100 million of that loss came as a result of stock-based compensation, which comes from paying out stock to its employees. On the other hand, the company only took in US$10 million in revenue.
The tiny income is attributed to the unusual monetisation model used by the instant messaging app. Most users don’t pay anything to use it, and those that do are only charged some US$1 per year. No ads are served to users, and there are no plans to add additional income streams to the service. In comparison, Asian developed instant messaging services like WeChat and KakaoTalk feature a variety of ways for getting users to part with their money; mostly in the form of premium emoji.
Details of Facebook’s acquisition were also of interest as it broke down just how much the social networking giant paid for WhatsApp. This includes US$488 million for the brand, US$288 for its technology, and US$15.3 billion for its “goodwill” value. In other words, Facebook just felt that US$16 billion was a reasonable number to pay for the company and adjusted the numbers to fit it. It could be that the amount of goodwill that Whatsapp has is invaluable in the case that Facebook makes some mistakes along the way while integrating the service with its own operations.